Shares Outstanding 10.

0
Current Stock Price $ 4.0

Free Cash Flow to the Firm Valuation Mod

Stock Symbol Fair Value per Share Potential

XYZ $ 4.9 22%

Income Statement Analysis Historical Year Ended Proje
2002 2003 2004 2005 2006

Total Revenue (IS) $ 25.0 $ 30.0 $ 40.0 $ 42.0 $ 44.1

% growth rate n/a 20.0% 33.3% 5.0% 5.0%

EBIT (IS) 10.0 12.0 19.0 20.0 21.0

% of revenue 40.0% 40.0% 47.5% 47.5% 47.6%

Less: Taxes (IS) 2.0 2.0 2.0 8.0 8.4

% of EBIT 20.0% 16.7% 10.5% 40.0% 40.0%

NOPAT 8.0 10.0 17.0 12.0 12.6

% of revenue 32.0% 33.3% 42.5% 28.5% 28.6%

Present Value

Present Value Factor 0.893 0.797

Present Value of Free Cash Flow 10.7 10.0

Per Share Value

Invested Capital Value 143.7

Plus: Cash 5.0
Less: Interest Bearing Debt, Preferred and Minority Interest 100.0
Cash Flow to the Firm Valuation Model

Potential You Decide WACC

22% HOLD 12%

Projected Year Ending
2007 2008 2009 2010 2011 2012 2013 Terminal

$ 46.3 $ 48.6 $ 51.1 $ 53.6 $ 56.3 $ 59.1 $ 62.1 $ 63.9

5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 3.0%

22.0 23.0 24.0 25.0 26.0 27.0 28.0 28.8

47.5% 47.3% 47.0% 46.6% 46.2% 45.7% 45.1% 45.1%

8.8 9.2 9.6 10.0 10.4 10.8 11.2 11.5

40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%

13.2 13.8 14.4 15.0 15.6 16.2 16.8 17.3

28.5% 28.4% 28.2% 28.0% 27.7% 27.4% 27.1% 27.1%

0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.361

9.4 8.8 8.2 7.6 7.1 6.5 6.1 69.3