When cash flows are the same in each period

Cash flows 1,000.0

t (periods) 5
r (discount rate) 25%
Present value 2,689.3

When cash flows are not the same in each period

Period (t) 1 2 3 4
Cash flows 1,000.0 1,245.0 1,258.0 1,568.0
Discount rate (r) 25% 25% 25% 25%
Present value 800.0 796.8 644.1 642.3

Sum of present values 3,504.1

Apple Unlevered Free Cash Flows

Period (t) 2017A 2018P 2019P

EBITDA 74,467 78,190 82,099

EBIT 67,343 70,710 74,245
Tax rate 26% 26% 26%

EBIT (1-t) 49,834 52,325 54,941

D&A 7,124 7,480 7,854
NWC (1,032) (929) (836)
Capital expenditures (9,836) (10,278) (10,741)
Unlevered free cash flows (UFCF) 46,089 48,598 51,219

Discount rate (r) 10% 10%

PV of UFCFs 44,180 42,329

Stage 1: Sum of present values 203,010

Terminal value - growth in perpetuity approach Terminal value - EBITDA multi

Long term growth rate 4% EBITDA multiple
2022 FCF x (1+g) 62,220 Terminal value in 2022
Terminal value in 2022 1,037,004 Stage 2: PV of TV
Stage 2: PV of TV 643,898

Enterprise value (stage 1 + 2) 846,908 Enterprise value (stage 1 + 2)

Net debt Shares outstanding

Data as of: 9/24/2016 Basic shares outstanding

Effect of dilutive securities
Commercial paper 8,105 Dilutive shares outstanding
Current portion of long term debt 3,500
Long term debt 75,427 Equity value
Gross debt 87,032

Cash and equivalents 20,484

Short term marketable securities 46,671 Equity value
Long term marketable securities 170,430
Nonoperating assets 237,585

Net debt (150,553.0)

 5
1,895.0
25%
621.0

2020P 2021P 2022P

86,204 90,515 95,040

77,957 81,855 85,948
26% 26% 26%

57,689 60,573 63,602

8,247 8,659 9,092
(753) (677) (610)
(11,224) (11,729) (12,257)
53,959 56,826 59,827

10% 10% 10%

40,540 38,813 37,148

rminal value - EBITDA multiple approach

ITDA multiple 9.0x
rminal value in 2022 855,363
age 2: PV of TV 531,113

terprise value (stage 1 + 2) 734,123

ares outstanding

sic shares outstanding 5,332

ect of dilutive securities 50
utive shares outstanding 5,382

Perpetuity EBITDA
approach approach
$185.32 $164.37