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 Equation in B14 <-- =D14+D23*(E14-D14)
8 Depreciable life of plant and equipment (Years) 10.00 Equation in B15 <-- =IF(AND(0<D24,D24<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 Uncorr. Univ. RV
14 Base year sales for 2011 ($000) 710.93 Uniform 500.00 1,500.00 0.21 <-- =RAND()
15 Expected sales Growth Rate 0.1701 Triangular -0.10 0.30 0.10 0.11 <-- =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 0.1512 <-- =D15+SQRT(D24*(E15-D15)*(F15-D15))
19 Terminal value multiple of NWC book values 1.00 Non-Stochastic Case if Th <= u i <= 1 0.1701 <-- =E15-SQRT((1-D24)*(E15-D15)*(E15-F15))
20
21 Supplementary Calculations for Cholesky Decomposition
22 Correlation Coefficient Uncorr. Std. Norm. RV Corr. Std. Norm. RV Corr. Univ. RV
23 -1.00 -0.80 -0.80 0.21 <-- =NORM.S.DIST(C23,1)
24 -1.22 0.80 0.79 <-- =NORM.S.DIST(C24,1)
25 <-- =NORM.S.INV(G15) <-- =A23*B23+SQRT(1-A23^2)*B24
26
27 FCF Calculations ($000) 2010 2011 2012 2013 2014 2015
28 Revenues 710.93 831.86 973.36 1,138.93 1,332.65 <-- =F28*(1+$B$15)
29 Less: Cost of goods sold -479.17 -560.68 -656.04 -767.64 -898.21 <-- =-G28*(1-$B$16)
30 Equals: Gross profit 231.76 271.19 317.32 371.29 434.45 <-- =G28+G29
31 Less: Operating expenses before depreciation -186.09 -198.19 -212.34 -228.89 -248.27 <-- =-($B$6+$B$17*G28)
32 Equals: EBITDA 45.67 73.00 104.98 142.40 186.18 <-- =G30+G31
33 Less: Depreciation and amortization -33.00 -33.00 -33.00 -33.00 -33.00 <-- =-($B$4/$B$8)
34 Equals: EBIT 12.67 40.00 71.98 109.40 153.18 <-- =G32+G33
35 Less: Tax -3.80 -12.00 -21.59 -32.82 -45.95 <-- =-G34*$B$9
36 Equals: NOPAT (Net op. profits after taxes) 8.87 28.00 50.39 76.58 107.23 <-- =G34+G35
37 Plus: Depreciation 33.00 33.00 33.00 33.00 33.00 <-- =-G33
38 Less: Capital expenditures -330.00
39 Help Row: level of working capital -177.73 -207.97 -243.34 -284.73 -333.16 <-- =G28*$B$10*(-1)
40 Less: Investment in net working capital -250.00 72.27 -30.23 -35.37 -41.39 -48.43 <-- =G39-F39
41 plus: Liquidation of Net Working Capital 333.16 <-- =(-1)*G39
42 plus: Liquidation of PP&E 165.00 <-- =(-1)*B38-C37-D37-E37-F37-G37
43 Equals: Project Free Cash Flow (PFCF) -580.00 114.14 30.77 48.01 68.19 589.96 <-- =G36+G37+G40+G41+G42
44
45 Valuation Output
46 NPV -64.03 <-- =NPV(B11,C43:G43)+B43
47 Internal Rate of Return (IRR) 0.0991 <-- =IRR(B43:G43)
48
 A B C D E F G H
49 Monte Carlo Simulation + Analysis of Output
50 Run BYS Exp. SGR NPV Some summary statistics of the simulated RVs
51 710.93 0.17 -64.03 Mean BYS 1,000.34 <-- =AVERAGE(B51:B5051)
52 1 1,458.13 -0.04 112.45 Mean SGR 0.10 <-- =AVERAGE(C51:C5051)
53 2 1,416.16 -0.02 121.66 Corr. BYS and SGR -0.99 <-- =CORREL(B52:B5051,C52:C5051)
54 3 805.89 0.14 -27.99
55 4 609.00 0.21 -102.05
56 5 1,163.40 0.06 92.95 Some summary statistics of the simulation output
57 6 506.57 0.28 -124.28 Mean NPV 25.36 <-- =AVERAGE(D51:D5051)
58 7 513.15 0.27 -126.04 SD NPV 84.35 <-- =STDEV.P(D51:D5051)
59 8 1,115.27 0.08 80.04 Confidence Interv. 2.34 <-- =CONFIDENCE.NORM(0.05,G58,5000)
60 9 707.93 0.17 -65.18 5%-Percentile -120.93 <-- =PERCENTILE.EXC(D51:D5051,0.05)
61 10 1,353.06 0.01 123.51 Prob. of NPV>0 0.621
62 11 949.58 0.11 25.05 Min NPV -126.31 <-- =MIN(D51:D5051)
63 12 892.09 0.12 4.12 Max NPV 123.95 <-- =MAX(D51:D5051)
64 13 1,266.83 0.04 114.45
65 14 1,063.37 0.09 64.38
66 15 1,144.24 0.07 88.01 Manual graphing of histogram
67 16 689.14 0.18 -72.32
68 17 908.41 0.12 10.10 Bins Frequency
69 18 909.55 0.12 10.52 -250 0 <-- =COUNTIF($D$51:$D$5051,"<"&F69)
70 19 535.53 0.25 -124.29 -225 0 <-- =COUNTIF($D$51:$D$5051,"<"&F70)-SUM($G$69:G69)
71 20 1,427.63 -0.02 120.05 -200 0
72 21 656.18 0.19 -84.76 -175 0
73 22 698.25 0.17 -68.86 -150 0
74 23 596.86 0.21 -106.31 -125 125
75 24 701.99 0.17 -67.44 -100 454
76 25 756.34 0.16 -46.75 -75 331
77 26 996.91 0.10 41.97 -50 349
78 27 974.22 0.11 33.89 -25 316
79 28 1,147.16 0.07 88.78 0 325
80 29 532.93 0.25 -124.77 25 331
81 30 1,170.10 0.06 94.62 50 359
82 31 1,058.44 0.09 62.80 75 415
83 32 511.51 0.27 -125.80 100 526
84 33 1,179.33 0.06 96.86 125 1,470
85 34 1,251.56 0.04 111.90 150 0
86 35 573.68 0.22 -114.02 175 0
87 36 815.19 0.14 -24.48 200 0
88 37 1,162.69 0.06 92.78 225 0
89 38 1,442.63 -0.03 117.04 250 0
90 39 596.19 0.21 -106.54 275 0
91 40 988.35 0.10 38.93 300 0
92 41 1,056.70 0.09 62.24 325 0
93 42 907.14 0.12 9.64 350 0
94 43 977.52 0.10 35.07 375 0
95 44 962.72 0.11 29.78 400 0
96 45 1,258.68 0.04 113.12 More -1 <-- =5000-SUM(G69:G95)
97 46 619.02 0.20 -98.46
98 47 1,405.70 -0.01 122.71
99 48 689.42 0.18 -72.22
100 49 1,011.09 0.10 46.96 Histogram
101 50 738.68 0.16 -53.47
102 51 944.36 0.11 23.17 1,600
103 52 848.04 0.13 -12.19 1,400
104 53 1,170.06 0.06 94.61
1,200
105 54 1,208.00 0.05 103.37
106 55 1,150.61 0.07 89.68 1,000
107 56 1,004.47 0.10 44.64 800
108 57 720.76 0.17 -60.29
600
109 58 534.62 0.25 -124.46
110 59 1,191.43 0.06 99.69 400
111 60 990.86 0.10 39.82 200
112 61 607.80 0.21 -102.48 0
113 62 1,043.82 0.09 58.05
114 63 595.01 0.21 -106.94 -200
115 64 629.13 0.20 -94.79
116 65 1,071.68 0.09 67.00