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A B C D E F G H I

1 Inputs Year Dividend Div growth Term value Investor CF


2 beta 0.95 2012 0.78 0.78
3 mkt_prem 0.08 2013 0.85 0.85
4 rf 0.02 2014 0.93 0.93
5 k_equity 0.0960 2015 1.00 1.00
6 plowback 0.75 2016 1.09 0.0863 1.09
7 roe 0.1 2017 1.18 0.0852 1.18
8 term_gwth 0.075 2018 1.28 0.0841 1.28
9 2019 1.38 0.0829 1.38
10 2020 1.50 0.0818 1.50
11 2021 1.62 0.0807 1.62
12 Value line 2022 1.75 0.0795 1.75
13 forecasts of 2023 1.88 0.0784 1.88
14 annual dividends 2024 2.03 0.0773 2.03
15 2025 2.18 0.0761 2.18
16 2026 2.35 0.0750 2.35
17 Transitional period 2027 2.52 0.0750 129.18 131.71
18 with slowing dividend
19 growth 40.29 = PV of CF
20 Beginning of constant E17 * (1+ F17)/(B5 - F17)
21 growth period NPV(B5,H2:H17)
A B C D E F G H I J K L M
1 2012 2013 2014 2015 2016
2 A. Input data
3 P/E 14.35 14.25 14.17 14.08 14.00
4 Cap spending/shr 2.65 2.70 2.82 2.93 3.05
5 LT Debt 30000 28500 27333 26167 25000
6 Shares 1800 1800 1798 1797 1795
7 EPS 3.10 3.75 3.83 3.92 4.00
8 Working Capital 36825 37750 41173 44597 48020
9
10 B. Cash flow calculations
11 Profits (after tax) 5700.0 6850.0 6970.0 7090.0 7210.0
12 Interest (after tax) 702.0 666.9 639.6 612.3 585.0 = (1-tax_rate) x r_debt x LT Debt
13 Chg Working Cap 925.0 3423.3 3423.3 3423.3
14 Depreciation 7000.0 7250.0 7166.67 7083 7000.0
15 Cap Spending 4860.0 5064.9 5269.8 5474.8
16 Terminal value
17 FCFF 8981.9 6288.0 6092.5 5896.9 104098.2
18 FCFE 6815.0 4481.8 4313.5 4145.3 83203.2 assumes fixed debt ratio after 2016
19
20 C. Discount rate calculations
21 Current beta 0.95 from Value Line
22 Unlevered beta 0.767 current beta /[1 + (1-tax)*debt/equity)]
23 terminal growth 0.02
24 tax_rate 0.35 from Value Line
25 r_debt 0.036 YTM in 2012 on A+ rated LT debt
26 risk-free rate 0.02
27 market risk prem 0.08
28 MV equity 81795 100940 Row 3 x Row 11
29 Debt/Value 0.27 0.25 0.23 0.22 0.20 linear trend from initial to final value
30 Levered beta 0.950 0.934 0.919 0.904 0.891 unlevered beta x [1 + (1-tax)*debt/equity]
31 k_equity 0.096 0.095 0.094 0.092 0.091 0.091 from CAPM and levered beta
32 WACC 0.077 0.077 0.077 0.077 0.078 0.078 (1-t)*r_debt*D/V + k_equity*(1-D/V)
33 PV factor for FCFF 1.000 0.929 0.862 0.800 0.742 0.742 Discount each year at WACC
34 PV factor for FCFE 1.000 0.913 0.835 0.765 0.701 0.701 Discount each year at k_equity
35
36 D. Present values Intrinsic val Equity val Intrin/share
37 PV(FCFF) 8341 5421 4875 4378 77283 100298 70298 39.05
A B C D E F G H I J K L M
38 PV(FCFE) 6225 3744 3299 2905 58307 74479 74479 41.38
39
40 * 2012 P/E ratio is from Yahoo! Finance. Other inputs are from Value Line.

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