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 <-- =D14+G14*(E14-D14)
8 Depreciable life of plant and equipment (Years) 10.00 <-- =IF(AND(0<G15,G15<G17),G18,G19)
9 Tax Rate 0.30
10 Net Working Capital / Sales 0.25
11 Project WACC 0.1325
12
13 Uncertain (potentially) inputs to valuation Simulated Value Distribution Min Max Most likely Random Shock
14 Base year sales for 2011 ($000) 488.83 Uniform 300.00 1,500.00 0.16 <-- =RAND()
15 Expected sales Growth Rate -0.0713 Triangular -0.10 0.30 0.10 0.01 <-- =RAND()
16 Gross Profit / Sales 0.33 Non-Stochastic Supporting Calculations Triang. D.
17 Variable Operating Expenses (before depr.) / Sales 0.10 Non-Stochastic Calculate Th 0.5000 <-- =(F15-D15)/(E15-D15)
18 Terminal value multiple of PPE book value 1.00 Non-Stochastic Case if 0 < u i < Th -0.0713 <-- =D15+SQRT(G15*(E15-D15)*(F15-D15))
19 Terminal value multiple of NWC book values 1.00 Non-Stochastic Case if Th <= u i <= 1 0.0186 <-- =E15-SQRT((1-G15)*(E15-D15)*(E15-F15))
20
21 FCF Calculations ($000) 2010 2011 2012 2013 2014 2015
22 Revenues 488.83 453.98 421.62 391.56 363.65 <-- =F22*(1+$B$15)
23 Less: Cost of goods sold -329.47 -305.99 -284.17 -263.91 -245.10 <-- =-G22*(1-$B$16)
24 Equals: Gross profit 159.36 148.00 137.45 127.65 118.55 <-- =G22+G23
25 Less: Operating expenses before depreciation -163.88 -160.40 -157.16 -154.16 -151.36 <-- =-($B$6+$B$17*G22)
26 Equals: EBITDA -4.52 -12.40 -19.71 -26.51 -32.82 <-- =G24+G25
27 Less: Depreciation and amortization -33.00 -33.00 -33.00 -33.00 -33.00 <-- =-($B$4/$B$8)
28 Equals: EBIT -37.52 -45.40 -52.71 -59.51 -65.82 <-- =G26+G27
29 Less: Tax 11.26 13.62 15.81 17.85 19.74 <-- =-G28*$B$9
30 Equals: NOPAT (Net op. profits after taxes) -26.27 -31.78 -36.90 -41.65 -46.07 <-- =G28+G29
31 Plus: Depreciation 33.00 33.00 33.00 33.00 33.00 <-- =-G27
32 Less: Capital expenditures -330.00
33 Help Row: level of working capital -122.21 -113.50 -105.41 -97.89 -90.91 <-- =G22*$B$10*(-1)
34 Less: Investment in net working capital -250.00 127.79 8.71 8.09 7.51 6.98 <-- =G33-F33
35 plus: Liquidation of Net Working Capital 90.91 <-- =(-1)*G33
36 plus: Liquidation of PP&E 165.00 <-- =(-1)*B32-C31-D31-E31-F31-G31
37 Equals: Project Free Cash Flow (PFCF) -580.00 134.53 9.93 4.19 -1.14 249.82 <-- =G30+G31+G34+G35+G36
38
39 Valuation Output
40 NPV -317.17 <-- =NPV(B11,C37:G37)+B37
41 Internal Rate of Return (IRR) -0.0965 <-- =IRR(B37:G37)
42
43 Monte Carlo Simulation + Analysis of Output
44 Run Base Year Sales Exp. SGR NPV Some summary statistics of the simulated RVs
45 488.83 -0.07 -317.17 Mean BYS 897.97 <-- =AVERAGE(B46:B10045)
46 1 1,281.51 0.19 336.26 Mean SGR 0.10 <-- =AVERAGE(C46:C10045)
47 2 1,454.31 0.23 509.84 Corr. BYS and SGR 0.02 <-- =CORREL(B46:B10045,C46:C10045)
48 3 1,472.69 0.17 419.84
49 4 1,031.48 0.15 115.15
50 5 750.13 0.15 -52.30 Some summary statistics of the simulation output
51 6 1,213.72 0.07 132.13 Mean NPV -8.05 <-- =AVERAGE(D46:D10045)
52 7 1,234.49 0.03 93.01 SD NPV 213.84 <-- =STDEV.P(D46:D10045)
53 8 510.64 0.09 -237.98 Confidence Interv. 4.19 <-- =CONFIDENCE.NORM(0.05,G52,10000)
54 9 892.49 -0.04 -130.43 5%-Percentile -319.16 <-- =PERCENTILE.EXC(D46:D10045,0.05)
55 10 360.20 0.13 -302.71 Prob. of NPV>0 0.473 <-- =1-PERCENTRANK.EXC(D46:D10045,0)
56 11 597.43 -0.02 -249.59 Min NPV -391.45 <-- =MIN(D46:D10045)
57 12 774.23 0.07 -110.06 Max NPV 634.79 <-- =MAX(D46:D10045)
58 13 922.15 0.18 86.50
59 14 980.97 0.20 143.57
60 15 780.70 0.20 7.96 Manual graphing of histogram
61 16 592.75 0.18 -129.63
62 17 1,340.07 0.09 225.55 Bins Frequency
63 18 726.96 0.16 -60.08 -391 0 <-- =COUNTIF($D$46:$D$10045,"<"&F63)
64 19 1,116.15 0.11 117.93 -352 139 <-- =COUNTIF($D$46:$D$10045,"<"&F64)-SUM($G$63:G63)
65 20 1,381.36 0.10 257.36 -312 440
66 21 1,124.83 -0.03 -19.11 -273 594
67 22 1,336.39 0.04 157.70 -233 641
68 23 981.27 0.22 170.85 -194 580
 A B C D E F G H
69 24 408.95 0.01 -323.31 -154 612
70 25 1,121.63 0.00 8.32 -115 609
71 26 1,336.34 0.13 277.60 -75 571
72 27 1,389.18 0.01 142.20 -36 567
73 28 1,023.91 0.19 160.22 4 586
74 29 576.31 0.12 -183.69 43 616
75 30 807.53 0.03 -118.62 83 590
76 31 1,315.09 0.13 255.53 122 577
77 32 927.79 0.05 -40.29 162 543
78 33 789.50 0.21 28.75 201 496
79 34 663.21 0.07 -166.80 241 431
80 35 1,082.59 0.07 61.94 280 359
81 36 500.73 0.07 -253.39 320 301
82 37 1,426.53 0.07 243.69 359 236
83 38 945.07 -0.05 -117.85 399 171
84 39 785.85 0.05 -114.06 438 118
85 40 574.25 0.23 -106.78 478 96
86 41 1,067.31 0.26 286.16 517 61
87 42 395.18 0.19 -256.47 557 40
88 43 922.76 0.10 -1.04 596 17
89 44 747.31 0.23 11.26 636 9
90 45 1,169.05 0.03 61.01 More 0 <-- =10000-SUM(G63:G89)
91 46 685.30 -0.03 -215.26
92 47 892.42 0.00 -102.89
93 48 907.69 0.11 4.62
94 49 804.30 0.19 15.82
Histogram
95 50 1,264.55 0.13 233.89 700
96 51 977.59 -0.06 -104.95
97 52 1,295.02 0.20 360.67 600
98 53 1,013.16 0.14 99.04 500
99 54 730.48 0.18 -45.74
100 55 653.39 0.15 -112.20 400
101 56 453.38 -0.02 -314.52 300
102 57 1,216.25 0.29 452.04
103 58 763.85 0.24 31.68 200
104 59 1,183.66 -0.01 24.52 100
105 60 569.09 -0.04 -271.66
106 61 319.00 -0.02 -373.44 0

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107 62 984.79 0.10 34.81
108 63 332.96 0.03 -352.86
109 64 1,486.83 0.17 423.72
110 65 1,074.84 0.02 6.82