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Βequity = Βasset (1+ (1-Tc) X B/S) : Asset Beta 0.71 0.63 0.8 Average 0.725 Tax 40%

The document contains financial projections for a company from 2002 to infinity including sales forecasts, costs, capital expenditures, depreciation, taxes, and free cash flows which are discounted to calculate net present value and equity value. It also includes the company's balance sheet, income statement, working capital assumptions and weighted average cost of capital calculation. The analysis is used to determine the price per share of the company's stock.

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49 views10 pages

Βequity = Βasset (1+ (1-Tc) X B/S) : Asset Beta 0.71 0.63 0.8 Average 0.725 Tax 40%

The document contains financial projections for a company from 2002 to infinity including sales forecasts, costs, capital expenditures, depreciation, taxes, and free cash flows which are discounted to calculate net present value and equity value. It also includes the company's balance sheet, income statement, working capital assumptions and weighted average cost of capital calculation. The analysis is used to determine the price per share of the company's stock.

Uploaded by

AkashNachrani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Equity = Asset [1+(1-tc)x B/S]

Asset Beta 0.71 0.63 0.8


Average 0.725
Tax 40%

Debt % Capital Actuant Briggs & Idex Corp.


Corp. Stratton
Balance Sheet Value 98% 52% 30%
Market Value 29% 37% 20%

Average B/S 0.353965


Equity 0.878975

CAPM MODEL

Rf Treasury Bonds 4.10%


Market risk premium 5.50%
Equity 0.8789748549

Re 8.934%
0.63 0.85 0.73

Lincoln Snap On Stanley Robertson Average


Electric Inc. Works Tool Co.
27% 29% 40% 28%
17% 19% 24% 37% 26%
30-Year U.S. U.S. Corporate Bonds Rated

Treasury Bonds AA A BBB

4.10% 4.52% 5.07% 6.07%

AAA AA A BBB BB B

Times Interest Earned (X) 27.3 18.0 10.4 5.9 3.4 1.5

EBITDA / Interest (X) 31.0 21.4 12.8 7.6 4.6 2.3


Pre-tax Return on Capital 25.2 25.4 19.7 15.1 12.5 8.8
(%)
Debt as % Capital (%) 12.6 36.1 38.4 43.7 51.9 74.9
Number of companies 6 15 118 213 297 345

1998 1999 2000 2001 2002


Sales 48.5 49.1 53.7 54.8 55.3
Cost of Goods 32.6 33.1 35.9 37.2 37.9
SGA 10.7 11.1 11.5 11.9 12.3

EBITDA 5.2 4.9 6.3 5.7 5.1


Interest 0.4 0.7 0.8 0.8 0.8
Ebitda/interest 13 7 7.875 7.125 6.375
Exhibit 1
BB

7.96%

Debt/Capital of Robertson 37% A 5.07%


Exhibit 6

Average EBIDTA/Interest 8.275 BBB 6.07%

Cost of Debt would be between 5.07% and 6.07%


A Rating Average
Cost of debt 5.07% 5.57%
Tax rate 40% 40%
Target D/V 37% 37%

Cost of equity 0.089343617 0.089343617


E/V 63% 63%

Wacc 0.067541879 0.068651879


BBB Rating
6.07%
40%
37%

0.089343617
63%

0.069761879
Actual Forecasts
2002 2003 2004 2005 2006 2007 to Infinity

Sales $ 55.3 $ 58.6 $ 62.1 $ 65.9 $ 69.8 $ 69.8


Cost of Goods 37.9 39.8 41.6 43.5 45.4 45.4
Gross Profit 17.4 18.8 20.5 22.4 24.4 24.4

Sell & Admin 12.3 12.3 12.4 12.5 13.3 13.3

Depreciation 2.1 2.3 2.5 2.7 2.9 2.9


EBIT 3.0 4.2 5.6 7.2 8.2 8.2
Tax @ 40% 1.2 1.7 2.2 2.9 3.3 3.3
EBIAT $ 1.8 $ 2.5 $ 3.4 $ 4.3 $ 4.9 $ 4.9

CoGS % Sales 69% 68% 67% 66% 65% 65%

Sell & Admin % Sales 22% 21% 20% 19% 19% 19%

Net Plant & Equip @

Beginning of Year $ 19.0 $ 20.7 $ 21.7 $ 22.6 $ 23.5


Capital Expenditures (4.0) (3.5) (3.6) (3.8) (2.9)
Depreciation Expense 2.3 2.5 2.7 2.9 2.9

Net Plant & Equip @


End of Year $ 20.7 $ 21.7 $ 22.6 $ 23.5 $ 23.5
Actual Forecasts
2002 2003 2004 2005 2006 2007 to Infinity

Sales $ 55.3 $ 58.6 $ 62.1 $ 65.9 $ 69.8 $ 69.8


% Change 5.97% 5.97% 6.12% 5.92% 0.00%

WC $ 24.00 $ 25.43 $ 26.95 $ 28.60 $ 30.29 $ 30.29

NWC $ 1.43 $ 1.52 $ 1.65 $ 1.69 $ -

Actual Forecasts
2002 2003 2004 2005 2006 2007 to Infinity

Sales $ 55.3 $ 58.6 $ 62.1 $ 65.9 $ 69.8 $ 69.8


Cost of 37.9 39.8 41.6 43.5 45.4 45.4
Goods
Gross 17.4 18.8 20.5 22.4 24.4 24.4
Profit
Sell & 12.3 12.3 12.4 12.5 13.3 13.3
Admin
Depreciati 2.1 2.3 2.5 2.7 2.9 2.9
on
EBIT 3.0 4.2 5.6 7.2 8.2 8.2
Tax @ 1.2 1.7 2.2 2.9 3.3 3.3
40%
EBIAT $ 1.8 $ 2.5 $ 3.4 $ 4.3 $ 4.9 $ 4.9
Less Capex (4.0) (3.5) (3.6) (3.8) (2.9)
Depreciati 2.3 2.5 2.7 2.9 2.9
Plus on
Less NWC $ 1.43 $ 1.52 $ 1.65 $ 1.69 $ -

FCFF -0.63 0.9 1.8 2.3 4.9


1 2 3 4 5
FCFF -0.63219 0.881012658 1.750814 2.307414 4.9
PV -0.59096 0.769853189 1.43014 1.761883 3.497522
NPV 57.00359

Equity Value = EV - Debt 45.00359 Long Term Debt

No. of Outstanding shares are 584,000

Price per share 77.060938


6 - Infinity
70.23893
50.13515

Long Term Debt 12

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