Page 1Page 1

INPUTS FOR VALUATIONCurrent Inputs

Enter the current revenues of the firm = $435Enter current capital invested in the firm = $603

{ As a naïve estimate, you can use BV of debt + BV of Equity)

Enter the current depreciation = $9Enter the current capital expenditures for the $16Enter the change in Working Capital in last ye$(170)Enter the value of current debt outstanding = $-Enter the number of shares outstanding = 39.84

High Growth Period

Your Inputs

Enter the growth rate in revenues for the next 5 years =20.00%What will all operating expenses be as a % of revenues in t 75.00%(Operating expenses include depreciation: This is equal to (1-Pre-tax Operating Margin))How much debt do you plan to use in financing investment0%Enter the growth rate in capital expenditures & depreciatio10.00%Enter working capital as a percent of revenues8.00%Enter the tax rate that you have on corporate income38.00%What beta do you want to use to calculate cost of equity =0.80Enter the current long term bond rate =5.00%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 =7.00%Enter operating expenses as a % of revenues in stable peri 75.00%Enter capital expenditures as a percent of depreciation in t 150.00%See capital expenditure worksheet (capex.xls) for details.How much debt do you plan to use in financing investment0.00%Enter interest rate of debt in stable period =0.00%

Page 2Page 2What beta do you want to use in the stable period =1.10

ESTIMATED CASHFLOWS

Base 1 2 3 4 5 6 7 8 9 10Growth in Revenue

20.00%20.00%20.00%20.00%20.00%17.40%14.80%12.20%9.60%7.00%

Growth in Deprec'n

10.00%10.00%10.00%10.00%10.00%9.40%8.80%8.20%7.60%7.00%Revenues $461 $553 $664 $797 $956 $1,147 $1,347 $1,546 $1,735 $1,901 $2,034

Operating Expenses

% of Revenues69.70%69.50%71.82%72.88%73.94%75.00%75.00%75.00%75.00%75.00%75.00%- $ Operating Expens $321 $384 $477 $581 $707 $860 $1,010 $1,160 $1,301 $1,426 $1,526EBIT $140 $169 $187 $216 $249 $287 $337 $387 $434 $475 $509 Tax Rate38.00%38.00%38.00%38.00%38.00%38.00%38.00%38.00%38.00%38.00%38.00%EBIT (1-t) $87 $105 $116 $134 $154 $178 $209 $240 $269 $295 $315+ Depreciation $9 $10 $11 $12 $13 $14 $15 $17 $18 $19 $21- Capital Expenditure $16 $17 $19 $21 $23 $25 $27 $28 $29 $30 $31- Change in WC $(170) $7 $9 $11 $13 $15 $16 $16 $15 $13 $11= FCFF $250 $89 $99 $114 $131 $151 $182 $213 $243 $271 $294

Page 3Page 3 Terminal Value (in '15) $7,775

COSTS OF EQUITY AND CAPITAL

1 2 3 4 5 6 7 8 9 10

Cost of Equity9.40%9.40%9.40%9.40%9.40%9.73%10.06%10.39%10.72%11.05%Proportion of Equity100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%100.00%After-tax Cost of Debt5.27%5.27%5.27%5.27%5.27%4.22%3.16%2.11%1.05%0.00%Proportion of Debt0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%Cost of Capital9.40%9.40%9.40%9.40%9.40%9.73%10.06%10.39%10.72%11.05%Cumulative WACC109.40%119.68%130.93%143.24%156.71%171.95%189.25%208.92%231.31%256.87%Present Value $82 $82 $87 $92 $96 $106 $112 $116 $117 $3,141

FIRM VALUATION

Value of Firm

$4,032

- Value of Debt

Value of Equity

$4,032

Value of Equity per Share

$101.20