Scribd
Upload
78 views9 pages

Brand Name Value

The document compares the valuation of a firm with and without a brand name using the discounted cash flow method. It finds that the firm with a brand name has a value of $79,611.25 compared to $15,371.24 for the same firm without a brand name, representing a significant premium for the branded firm due to higher expected growth and returns over both the high-growth period and stable growth period.

Uploaded by

Ganapathiraju Sravani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
78 views9 pages

Brand Name Value

The document compares the valuation of a firm with and without a brand name using the discounted cash flow method. It finds that the firm with a brand name has a value of $79,611.25 compared to $15,371.24 for the same firm without a brand name, representing a significant premium for the branded firm due to higher expected growth and returns over both the high-growth period and stable growth period.

Uploaded by

Ganapathiraju Sravani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
You are on page 1/ 9

Brand Name Generic Company

Market value of Equity 98160 949


Debt 7178 344.7
Cash 6707 26.6
Enterprise Value 98631 1267.1
Sales 21962 1646
EBITDA 7760 186.2
Capital Invested 16406 775.4
EV/Sales 4.49 0.769805589
EV/EBITDA 12.71 6.805048335
EV/Capital Invested 6.01 1.634124323
Brand Company Input Value of brand name
Sales 21962 81724.52965
EBITDA 7760 45823.82492
Capital Invested 16406 71821.55636
Brand Name No brand name Brand Name Value
Current Tax Rate = 40.00% 40.00% (in percent)
Current Revenues = $21,962.00 $21,962.00 (in $)
Capital Invested (Book values of debt and equity) $16,406.00 $16,406.00
High Growth Period
Length of high-growth period (n) = 10 10 (Number of periods)
Reinvestment Rate (as % of EBIT(1-t)) = 50% 50%
Return on capital (After-tax) = 20.84% 7.65%
Growth rate during period (g) = 10.42% 3.83% (in percent)
Cost of Equity during period = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent) Cost of Capital =
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent)
Stable Growth Period
Growth rate in steady state = 4.00% 4.00% (in percent)
Return on capital in steady state = 7.65% 7.65%
Reinvestment Rate in Stable growth = 52.28% 52.28%
Cost of Equity in steady state = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent)
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent) Cost of capital =
Value of Firm = $79,620.29 $17,053.55 $62,566.73
7.65% 7.65%
7.6511% 7.6511%
Brand Name GenericBrand Name Value
Current Tax Rate = 40.00% 40.00% (in percent)
Current Revenues = $21,962.00 $21,962.00 (in $)
Capital Invested (Book values of debt and equity) $16,406.00 $16,406.00
High Growth Period
Length of high-growth period (n) = 10 10 (Number of periods)
Reinvestment Rate (as % of EBIT(1-t)) = 50% 50.00%
Return on capital (After-tax) = 20.84% 9.20%
Growth rate during period (g) = 10.42% 4.60% (in percent)
Cost of Equity during period = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent)
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent)
Stable Growth Period
Growth rate in steady state = 4.00% 4.00% (in percent)
Return on capital in steady state = 7.65% 7.65%
Reinvestment Rate in Stable growth = 52.28% 52.28%
Cost of Equity in steady state = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent)
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent)
Value of Firm = $79,611.25 $21,854.65 $57,756.60
(Number of periods)
Cost of Capital = 7.65% 7.65%
Cost of capital = 7.6511% 7.6511%
Brand NameGeneric Brand Name Value
Current Tax Rate = 40.00% 40.00% (in percent)
Current Revenues = $21,962.00 ####### (in $)
Capital Invested (Book values of debt and equity) $16,406.00 #######
High Growth Period
Length of high-growth period (n) = 10 10 (Number of periods)
Reinvestment Rate (as % of EBIT(1-t)) = 50% 50%
Return on capital (After-tax) = 20.84% 11.20%
Growth rate during period (g) = 10.4194% 5.60% (in percent)
Cost of Equity during period = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent) Cost of Capital =
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent)
Stable Growth Period
Growth rate in steady state = 4.00% 4.00% (in percent)
Return on capital in steady state = 7.65% 7.65%
Reinvestment Rate in Stable growth =52.28% 52.28%
Cost of Equity in steady state = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent)
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent) Cost of capital =
Value of Firm = $79,611.25 ####### $50,728.15
7.65% 7.65%
7.6511% #####
Firm Value Multiples
Brand Name Company Generic Brand Name Value
Current Tax Rate = 40.00% 40.00% (in percent)
Current Revenues = $21,962.00 $21,962.00 (in $)
High Growth Period
Length of high-growth period (n) = 10 10 (Number of periods)
Reinvestment Rate (as % of EBIT(1-t)) = 50% 50%
Operating Margin (after-tax) 15.57% 5.28%
Sales/Capital (Turnover ratio) 1.34 1.34
Growth rate during period (g) = 10.42% 3.53% (in percent)
Cost of Equity during period = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent)
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent)
Stable Growth Period
Growth rate in steady state = 4.00% 4.00% (in percent)
Return on capital in steady state = 7.65% 7.65%
Reinvestment Rate in Stable growth = 52.28% 52.28%
Cost of Equity in steady state = 8.00% 8.00% (in percent)
After-tax Cost of Debt = 2.88% 2.88% (in percent)
Debt Ratio (D / (D + E)) = 6.81% 6.81% (in percent)
Value of Firm = $79,611.25 $15,371.24 $64,240.01
Page 8
Firm Value Multiples
(Number of periods)
Brand Name Generic
Return on Capital = 20.84% 7.06%
Cost of Capital = 7.65% 7.65%
Cost of capital = 7.6511% 7.6511%
Page 9

You might also like