Example of Business Valuation

Valuation summary (NPV + TV)

Years
0 1 2 3 4
2020 2021 2022 2023 2024
Total revenue 50.00 55.00 60.50 66.55 73.21
Costs of revenue (37.50) (41.25) (45.38) (49.91) (54.90)
Gross profit 12.50 13.75 15.13 16.64 18.30

Sales & Marketing costs (5.00) (5.50) (6.05) (6.66) (7.32)

Other operational costs (1.25) (1.38) (1.51) (1.66) (1.83)
Profit before tax 6.25 6.88 7.56 8.32 9.15
Corporate Profit Tax (20%) - (1.25) (1.38) (1.51) (1.66)

Free Cash Flow (FCF) 6.25 5.63 6.19 6.81 7.49

Discounted Cash Flow

6.25 4.89 4.68 4.48 4.28

Discount rate (%) 15.0%

Long term growth rate (%) 2.0%
Net Present Value (AZN'Mln) 58.2
 ∞
Afterwards

Terminal
Value

33.59