INPUTS FOR VALUATION

Current Inputs
Enter the current revenues of the firm = $12,406
Enter the current capital expenditures = $233
Enter the current dollar depreciation for the firm = $298
Enter the change in Working Capital in last year$115
=
Enter the value of current debt outstanding = $-
Enter the number of shares outstanding = 1,500.00

High Growth Period Your Inputs

Enter the growth rate in revenues for the next 5 years = 30.00%

What will operating expenses be as a % of revenues in the fifth year?

70.00% (Operating Expenses include depreciation: This is equal to (1-EBIT/Sales))
How much debt do you plan to use in financing investments? 0%
Enter the growth rate in capital expenditures & depreciation 30.00%
Enter working capital as a percent of revenues 7.50%

Enter the tax rate that you have on corporate income 36.00%
What beta do you want to use to calculate cost of equity = 1.25
Enter the current long term bond rate = 6.50%
Enter the market risk premium you want to use = 5.50%

Enter your cost of borrowing money = 8.50%

Stable Period
Enter the growth rate in revenues = 6.00%
Enter operating expenses as a % of revenues in stable period = 75.00%

Enter capital expenditures as a percent of depreciation in this period

200.00%
How much debt do you plan to use in financing investments? 5.00%
Enter interest rate of debt in stable period = 7.50%
What beta do you want to use in the stable period = 1.10

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 ESTIMATED CASHFLOWS

Base 1 2 3 4 5 6 7 8 9 10
Growth in Revenue 30.00% 30.00% 30.00% 30.00% 30.00% 25.20% 20.40% 15.60% 10.80% 6.00%
Growth in Deprec'n 30.00% 30.00% 30.00% 30.00% 30.00% 25.20% 20.40% 15.60% 10.80% 6.00%
Revenues $12,406 $16,128 $20,966 $27,256 $35,433 $46,063 $57,670 $69,435 $80,267 $88,936 $94,272

COGS
% of Revenues 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 71.00% 72.00% 73.00% 74.00% 75.00%
- $ COGS $8,684 $11,289 $14,676 $19,079 $24,803 $32,244 $40,946 $49,993 $58,595 $65,813 $70,704
EBIT $3,722 $4,838 $6,290 $8,177 $10,630 $13,819 $16,724 $19,442 $21,672 $23,123 $23,568

Tax Rate 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00%

EBIT (1-t) $2,382 $3,097 $4,025 $5,233 $6,803 $8,844 $10,704 $12,443 $13,870 $14,799 $15,084
+ Depreciation $298 $387 $504 $655 $851 $1,106 $1,385 $1,668 $1,928 $2,136 $2,264

- Capital Expenditures $233 $303 $394 $512 $665 $865 $1,598 $2,331 $3,063 $3,796 $4,529
- Change in WC $115 $279 $363 $472 $613 $797 $871 $882 $812 $650 $400
= FCFF $2,332 $2,902 $3,772 $4,904 $6,375 $8,288 $9,620 $10,898 $11,922 $12,489 $12,419
Terminal Value (in '05) $213,614

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 COSTS OF EQUITY AND CAPITAL

1 2 3 4 5 6 7 8 9 10
Cost of Equity 13.38% 13.38% 13.38% 13.38% 13.38% 13.21% 13.05% 12.88% 12.72% 12.55%
Proportion of Equity 100.00% 100.00% 100.00% 100.00% 100.00% 99.00% 98.00% 97.00% 96.00% 95.00%
After-tax Cost of Debt 5.44% 5.44% 5.44% 5.44% 5.44% 5.31% 5.18% 5.06% 4.93% 4.80%

Proportion of Debt 0.00% 0.00% 0.00% 0.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00%
Cost of Capital 13.38% 13.38% 13.38% 13.38% 13.38% 13.13% 12.89% 12.65% 12.40% 12.16%
Cumulative WACC 113.38% 128.54% 145.73% 165.22% 187.32% 211.92% 239.23% 269.48% 302.91% 339.75%

Present Value $2,560 $2,935 $3,365 $3,859 $4,425 $4,540 $4,555 $4,424 $4,123 $66,530

FIRM VALUATION
Value of Firm $101,315

- Value of Debt $-
Value of Equity $101,315
Value of Equity per Share $67.54

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Value of firm by year $101,315 $111,964 $123,167 $134,736 $146,381 $157,672 $168,755 $179,606 $190,396 $201,523
$ Value of Debt $- $- $- $- $- $1,577 $3,375 $5,388 $7,616 $10,076

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