The document outlines a three stage growth model for valuing a firm, including base year information, inputs for a high growth phase lasting 5 years with 25% annual growth, a transition period of 5 years where growth declines linearly from 25% to 10%, and a stable growth period with 10% annual growth. It provides all the necessary financial inputs and asks to calculate the value of the firm using this three stage discounted cash flow model.
The document outlines a three stage growth model for valuing a firm, including base year information, inputs for a high growth phase lasting 5 years with 25% annual growth, a transition period of 5 years where growth declines linearly from 25% to 10%, and a stable growth period with 10% annual growth. It provides all the necessary financial inputs and asks to calculate the value of the firm using this three stage discounted cash flow model.
The document outlines a three stage growth model for valuing a firm, including base year information, inputs for a high growth phase lasting 5 years with 25% annual growth, a transition period of 5 years where growth declines linearly from 25% to 10%, and a stable growth period with 10% annual growth. It provides all the necessary financial inputs and asks to calculate the value of the firm using this three stage discounted cash flow model.
EBIT 250 Million Capital expenditure 295 M Depreciation 240M Net working capital as a % of revenue 20% Corporate tax rate for all time 40%
Inputs for high growth rates:
Length of the high growth phase 5 years
Growth rate in revenues, EBIT, depreciation 25% and capital expenditure Net working capital as a % of revenue 20% Cost of debt 15% pre tax Debt equity ratio 1.5:1 Risk free rate 12% Market risk premium 6% Equity beta 1.583 Inputs for transition period:
Length of the high growth phase 5 years
Growth rate in EBIT, depreciation and capital 25% expenditure will decline from 25% in years 5 to 10 % in year 10 in linear movements of 3% each year Net working capital as a % of revenue 20% Cost of debt 14% pre tax Debt equity ratio during this period will fall to 1:1 Risk free rate 11% Market risk premium 6% Equity beta 1.10
Inputs for stable growth period
Expected growth rate in revenues and EBIT, 10%
capital expenditure and depreciation Net working capital as a % of revenue 20% Cost of debt 12 % pre tax Debt equity ratio 0:1 Risk free rate 10% Market risk premium 6% Equity beta 1.0 Value of debt 1500 Calculate the value of the firm.