A B C D E F G H

1 Earthilizer Project --- Valuation Model Setup

2
3 Certain inputs to valuation Value
4 Initial investment in plant and equipment ($000) 330.00
5 Initial new working capital requirements ($000) 250.00
6 Fixed Operating Costs ($000) 115.00
7 Depreciation Method Straight Line
8 Depreciable life of plant and equipment (Years) 10.00
9 Tax Rate 0.30
10 Net Working Capital / Sales 0.25
11 Project WACC 0.1325
12
13 Uncertain (potentially) inputs to valuation Value Used Distribution Min Max Random Simulated
14 Base year sales for 2011 ($000) 900.00 Non-Stochastic
15 Expected sales Growth Rate 0.09 Uniform 0.00 0.20 0.47 0.09 <-- =D15+F15*(E15-D15)
16 Gross Profit / Sales 0.33 Non-Stochastic <-- =RAND()
17 Variable Operating Expenses (before depr.) / Sales 0.10 Non-Stochastic
18 Terminal value multiple of PPE book value 1.00 Non-Stochastic
19 Terminal value multiple of NWC book values 1.00 Non-Stochastic
20
21 FCF Calculations ($000) 2010 2011 2012 2013 2014 2015
22 Revenues 900.00 984.40 1,076.72 1,177.70 1,288.14 <-- =F22*(1+$B$15)
23 Less: Cost of goods sold -606.60 -663.49 -725.71 -793.77 -868.21 <-- =-G22*(1-$B$16)
24 Equals: Gross profit 293.40 320.92 351.01 383.93 419.93 <-- =G22+G23
25 Less: Operating expenses before depreciation -205.00 -213.44 -222.67 -232.77 -243.81 <-- =-($B$6+$B$17*G22)
26 Equals: EBITDA 88.40 107.48 128.34 151.16 176.12 <-- =G24+G25
27 Less: Depreciation and amortization -33.00 -33.00 -33.00 -33.00 -33.00 <-- =-($B$4/$B$8)
28 Equals: EBIT 55.40 74.48 95.34 118.16 143.12 <-- =G26+G27
29 Less: Tax -16.62 -22.34 -28.60 -35.45 -42.94 <-- =-G28*$B$9
30 Equals: NOPAT (Net op. profits after taxes) 38.78 52.13 66.74 82.71 100.18 <-- =G28+G29
31 Plus: Depreciation 33.00 33.00 33.00 33.00 33.00 <-- =-G27
32 Less: Capital expenditures -330.00
33 Help Row: level of working capital -225.00 -246.10 -269.18 -294.42 -322.04 <-- =G22*$B$10*(-1)
34 Less: Investment in net working capital -250.00 25.00 -21.10 -23.08 -25.24 -27.61 <-- =G33-F33
35 plus: Liquidation of Net Working Capital 322.04 <-- =(-1)*G33
36 plus: Liquidation of PP&E 165.00 <-- =(-1)*B32-C31-D31-E31-F31-G31
37 Equals: Project Free Cash Flow (PFCF) -580.00 96.78 64.03 76.66 90.47 592.61 <-- =G30+G31+G34+G35+G36
38
39 Valuation Output
40 NPV -18.73 <-- =NPV(B11,C37:G37)+B37
41 Internal Rate of Return (IRR) 0.1229 <-- =IRR(B37:G37)
42

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 A B C D E F G H
43 Monte Carlo Simulation + Analysis of Output
44 Run Sales Growth NPV IRR Some summary statistics of the simulated RVs
45 0.09 -18.73 0.12 Mean Sales Growth 0.10 <-- =AVERAGE(B46:B10045)
46 1 0.07 -41.38 0.11
47 2 0.12 4.30 0.13 Some summary statistics of the simulation output
48 3 0.07 -43.57 0.11 Mean NPV -10.73 <-- =AVERAGE(C46:C10045)
49 4 0.09 -21.22 0.12 SD NPV 53.84 <-- =STDEV.P(C46:C10045)
50 5 0.03 -77.36 0.09 Confidence Interv. 1.06 <-- =CONFIDENCE.NORM(0.05,G49,10000)
51 6 0.07 -44.35 0.11 5%-Percentile -89.93 <-- =PERCENTILE.EXC(C46:C10045,0.05)
52 7 0.04 -68.45 0.10 Prob. of NPV>0 0.429 <-- =1-PERCENTRANK.EXC(C46:C10045,0)
53 8 0.19 76.96 0.17 Min NPV -97.62 <-- =MIN(C46:C10045)
54 9 0.17 55.03 0.16 Max NPV 89.00 <-- =MAX(C46:C10045)
55 10 0.09 -24.29 0.12
56 11 0.01 -92.67 0.08
57 12 0.02 -85.65 0.09
58 13 0.19 79.24 0.17
59 14 0.11 -3.85 0.13
60 15 0.02 -78.69 0.09
61 16 0.17 55.91 0.16
62 17 0.15 32.99 0.15
63 18 0.01 -90.16 0.08
64 19 0.03 -73.88 0.09
65 20 0.06 -50.77 0.11
66 21 0.10 -11.62 0.13
67 22 0.19 73.40 0.17
68 23 0.17 58.68 0.16
69 24 0.02 -79.34 0.09
70 25 0.14 25.97 0.15
71 26 0.13 19.55 0.14
72 27 0.19 77.47 0.17
73 28 0.10 -15.35 0.12
74 29 0.09 -23.55 0.12
75 30 0.11 -3.27 0.13
Note that the histogram was created as follows: I selected all 10000 NPVs and then
76 31 0.08 -33.49 0.12
went to "Insert" and selected "Insert Statistic Chart". Then I selected the histogram graph.
77 32 0.11 -4.98 0.13
78 33 0.19 74.49 0.17
79 34 0.19 77.49 0.17 This procedure also creates a dynamic chart that updates when you rerun the simulation.
80 35 0.00 -95.29 0.08 Furthermore, it is very easy to play with the bins. Just slect the x-axis and then click on
81 36 0.02 -78.23 0.09 "Format Axis". Then you can select the number of bins or play with the size of the bins.
82 37 0.08 -28.45 0.12
83 38 0.06 -49.21 0.11
84 39 0.00 -96.81 0.08

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