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    Inputs For Valuation Current Inputs (As A Naïve Estimate, You Can Use BV of Debt + BV of Equity)

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    Vijay Chotrani
    This document provides inputs and calculations for valuing a firm. It includes current financial information, assumptions for a high growth period with 25% annual revenue growth over 5 years and a stable period with 6% growth. Cash flows are projected for 10 years and discounted using a weighted average cost of capital (WACC) to calculate firm value of $80.37 million. Capital invested is also tracked over time.

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    Inputs For Valuation Current Inputs (As A Naïve Estimate, You Can Use BV of Debt + BV of Equity)

    Uploaded by

    Vijay Chotrani
    14 views6 pages
    This document provides inputs and calculations for valuing a firm. It includes current financial information, assumptions for a high growth period with 25% annual revenue growth over 5 years and a stable period with 6% growth. Cash flows are projected for 10 years and discounted using a weighted average cost of capital (WACC) to calculate firm value of $80.37 million. Capital invested is also tracked over time.

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    This document provides inputs and calculations for valuing a firm. It includes current financial information, assumptions for a high growth period with 25% annual revenue growth over 5 years and a stable period with 6% growth. Cash flows are projected for 10 years and discounted using a weighted average cost of capital (WACC) to calculate firm value of $80.37 million. Capital invested is also tracked over time.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    14 views6 pages

    Inputs For Valuation Current Inputs (As A Naïve Estimate, You Can Use BV of Debt + BV of Equity)

    Uploaded by

    Vijay Chotrani
    This document provides inputs and calculations for valuing a firm. It includes current financial information, assumptions for a high growth period with 25% annual revenue growth over 5 years and a stable period with 6% growth. Cash flows are projected for 10 years and discounted using a weighted average cost of capital (WACC) to calculate firm value of $80.37 million. Capital invested is also tracked over time.

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    Page 1

    INPUTS FOR VALUATION


    Current Inputs
    Enter the current revenues of the firm =
    Enter current capital invested in the firm =
    Enter the current depreciation =
    Enter the current capital expenditures for the firm =
    Enter the change in Working Capital in last year =
    Enter the value of current debt outstanding =
    Enter the number of shares outstanding =

    $12,406
    $20,000
    { As a nave estimate, you can use BV of debt + BV of Equity)
    $233
    $298
    $115
    $1,500.00

    High Growth Period

    Your Inputs

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

    25.00%

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

    70.00% (Operating expenses include depreciation: This is equal to (1-Pre-tax Operating Margin))

    How much debt do you plan to use in financing investments?


    Enter the growth rate in capital expenditures & depreciation
    Enter working capital as a percent of revenues
    Enter the tax rate that you have on corporate income
    What beta do you want to use to calculate cost of equity =

    0%
    25.00%
    7.50%
    36.00%
    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 =
    Enter operating expenses as a % of revenues in stable period =
    Enter capital expenditures as a percent of depreciation in this period

    6.00%
    75.00%
    200.00% See capital expenditure worksheet (capex.xls) for details.

    How much debt do you plan to use in financing investments?

    5.00%

    Enter interest rate of debt in stable period =

    7.50%

    Page 1

    Page 2

    What beta do you want to use in the stable period =

    1.10
    ESTIMATED CASHFLOWS

    Base
    Growth in Revenue
    Growth in Deprec'n
    Revenues

    10

    25.00%

    25.00%

    25.00%

    25.00%

    25.00%

    21.20%

    17.40%

    13.60%

    9.80%

    6.00%

    25.00%

    25.00%

    25.00%

    25.00%

    25.00%

    21.20%

    17.40%

    13.60%

    9.80%

    6.00%

    $12,406

    $15,508

    $19,384

    $24,230

    $30,288

    $37,860

    $45,886

    $53,871

    $61,197

    $67,194

    $71,226

    % of Revenues

    70.00%

    70.00%

    70.00%

    70.00%

    70.00%

    70.00%

    71.00%

    72.00%

    73.00%

    74.00%

    75.00%

    Operating Expenses

    - $ Operating Expenses

    $8,684

    $10,855

    $13,569

    $16,961

    $21,202

    $26,502

    $32,579

    $38,787

    $44,674

    $49,724

    $53,420

    EBIT

    $3,722

    $4,652

    $5,815

    $7,269

    $9,086

    $11,358

    $13,307

    $15,084

    $16,523

    $17,471

    $17,807

    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

    $2,977

    $3,722

    $4,652

    $5,815

    $7,269

    $8,517

    $9,654

    $10,575

    $11,181

    $11,396

    + Depreciation

    $233

    $291

    $364

    $455

    $569

    $711

    $862

    $1,012

    $1,149

    $1,262

    $1,338

    - Capital Expenditures

    $298

    $373

    $466

    $582

    $728

    $909

    $1,263

    $1,616

    $1,969

    $2,322

    $2,675

    - Change in WC

    $115

    $233

    $291

    $363

    $454

    $568

    $602

    $599

    $549

    $450

    $302

    $2,202

    $2,664

    $3,329

    $4,162

    $5,202

    $6,503

    $7,514

    $8,451

    $9,206

    $9,671

    $9,756

    = FCFF

    Page 2

    Page 3

    Terminal Value (in '05)

    $167,813
    COSTS OF EQUITY AND CAPITAL
    1

    Cost of Equity
    Proportion of Equity

    10

    13.38%

    13.38%

    13.38%

    13.38%

    13.38%

    13.21%

    13.05%

    12.88%

    12.72%

    12.55%

    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%

    13.38%

    13.38%

    13.38%

    13.38%

    13.38%

    13.13%

    12.89%

    12.65%

    12.40%

    12.16%

    113.38%

    128.54%

    145.73%

    165.22%

    187.32%

    211.92%

    239.23%

    269.48%

    302.91%

    339.75%

    Present Value

    $2,349

    $2,590

    $2,856

    $3,149

    $3,472

    $3,546

    $3,532

    $3,416

    $3,193

    $52,265

    Value of Firm

    $80,367

    Cost of Capital
    Cumulative WACC

    FIRM VALUATION

    - Value of Debt
    Value of Equity
    Value of Equity per Share

    $$80,367
    $53.58

    1995
    Value of Firm by year
    $ Value of Debt

    1996

    $80,367
    $-

    1997

    $88,453
    $-

    $96,954
    $-

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    $105,760

    $114,703

    $123,542

    $132,250

    $140,844

    $149,448

    $158,314

    $1,235

    $2,645

    $4,225

    $5,978

    $7,916

    $-

    $-

    Page 3

    EVA Valuation

    EBIT (1-t)
    - WACC (CI)
    EVA
    Terminal EVA
    PV
    PV of EVA
    + Capital Invested
    + PV of Chg Capital in Yr 10
    = Firm Value

    Base
    $2,382

    Cumulated WACC

    $2,977
    $2,675
    $302

    $3,722
    $2,717
    $1,005

    $4,652
    $2,769
    $1,883

    $5,815
    $2,835
    $2,980

    $267

    $782

    $1,292

    $1,804

    $60,463
    $20,000
    $(96) This reconciles the assumptions on stable growth, ROC and Capital Invested

    $80,367

    WACC
    ROC
    Capital Invested
    Calculation of Capital Invested
    Initial
    + Net Cap Ex
    + Chg in WC
    Ending

    $20,000

    $20,000

    13.38%
    14.89%
    $20,000

    13.38%
    18.32%
    $20,314

    13.38%
    22.47%
    $20,706

    13.38%
    27.44%
    $21,197

    $20,000
    $81
    $233
    $20,314

    $20,314
    $102
    $291
    $20,706

    $20,706
    $127
    $363
    $21,197

    $21,197
    $159
    $454
    $21,810

    113.38%

    128.54%

    145.73%

    165.22%

    Page 4

    EVA Valuation

    5
    $7,269
    $2,917
    $4,352

    6
    $8,517
    $2,964
    $5,552

    7
    $9,654
    $3,039
    $6,615

    8
    $10,575
    $3,134
    $7,441

    9
    $11,181
    $3,244
    $7,938

    $2,323

    $2,620

    $2,765

    $2,761

    $2,620

    10
    $11,396
    $3,364
    $8,032
    $138,838
    $43,229

    13.38%
    33.33%
    $21,810

    13.13%
    37.72%
    $22,576

    12.89%
    40.94%
    $23,579

    12.65%
    42.67%
    $24,782

    12.40%
    42.76%
    $26,151

    12.16%
    41.20%
    $27,661

    $21,810
    $198
    $568
    $22,576

    $22,576
    $401
    $602
    $23,579

    $23,579
    $604
    $599
    $24,782

    $24,782
    $820
    $549
    $26,151

    $26,151
    $1,060
    $450
    $27,661

    $27,661
    $1,338
    $302
    $29,301

    187.32%

    211.92%

    239.23%

    269.48%

    302.91%

    339.75%

    and Capital Invested

    Page 5

    EVA Valuation

    Terminal Year
    $12,080
    $3,524
    $8,556

    12.16%
    41.69%
    $28,975 (Adjusted to reflect terminal ROC)

    Page 6

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