Enterprise value (in Million $)

Scenario 1 38.76254546
Scenario 2 48.497304
Scenario 3 33.60240077
Scenario 4 18.71197605
WACC
Weight of debt 0.28 0.37
Weight of equity 0.72 0.63
Cost of debt 7.96% 4.77600%
Cost of equity 9.5% 10.0%

WACC 8.15% 8.06%

Cost of debt Interest/debt So the debt falls with BB rate

Risk free rate+Beta*(market risk premium)

 Company Market Inputs Values
Debt/capital 0.28 0.37 Interest expense 0.8
Equity/capital 0.72 0.63 EBIT 3
EBITDA 5.1
Ratio Value Bond type Score Debt 12
Times interest earned 3.75 BB 2 Equity 31
EBITDA/Interest 6.375 BBB 3 Capital 43
Pre-tax return on capital 7% B 1 Pre tax income 2.8
Debt as % of capital 28% AA 5
2.75 Bond name Score
So the debt falls with BB rate BB cost 7.96% B 1
40% BB 2
Cost of Equity BBB 3
Avg of asset Beta of peers 0.725 A 4
Equity Beta 0.8941667 0.98047619 AA 5
Cost of Equity 9.5% 10.0% AAA 6
beta asset Unlevered Avg of peer companies
Equity Levered
Equity Beta Aset Beta*(1+(1-T)*d/E)
Avg of peer companies

Aset Beta*(1+(1-T)*d/E)
Year 2002 2003 2004 2005 2006 2007
Revenue 55.3 58.6 62.1 65.9 69.8 69.8
37.9911 39.86024 41.630504 43.469702 45.379734 47.194924
Working Capital 24 25.432188 26.951175 28.600362 30.292948 30.292948
Accounts receivables 8
Inventories 18
Accounts payables 2
Percentage of Revenue 0.4339964

Net delta working capital 1.4321881 1.5189873 1.6491863 1.6925859 0

Another method WC Current Assets - Current Liabilities

Currenrt Assests Accounts receivables+Inventory
Current Liabilities Accounts Payable

Credit sales/Avg account receivables

6.8867925 Credit sales/acct receivables

Working Capital by days

Accounts Receivables 8.029863 8.5090411 9.0172603 9.5690411 10.135342 10.135342
Inventory 18.006741 18.892662 19.731718 20.603448 21.508751 22.369101
Accounts Payables 2 2 2 2 2 2
WC 24.036604 25.401703 26.748978 28.172489 29.644093 30.504443
NWC 1.3650992 1.3472756 1.4235105 1.4716044 0.86035
 30.416667
8000 6000
500
12

173
COGS/avg inventory 2.1098266
 2002 2003 2004 2005 2006 2007 2007
EBIAT 1.8 2.5 3.4 4.3 4.9 4.9 WACC
plus(D&A) 2.1 2.3 2.5 2.7 2.9 2.9 8%
minus(NWC) 1.4321881 1.5189873 1.6491863 1.6925859 0
minus(Capex) 4 3.5 3.6 3.8 2.9
FCFF -0.632188 0.8810127 1.7508137 2.3074141 4.9 60.82423

DFCC -0.585056 0.7545437 1.3876926 1.6925051 3.3262252 41.288793

EV at 2002 47.864704

Total Debt 12
Equity value 35.864704 Total shares 584000

Price of each share 61.412164

Terminal
0%
FCFF Discounting rate WACC

EBIT(1-T)+D/A-Net Capex-net working cap

Netincome + I*(1-T)+D/A
 2002 2003 2004 2005 2006 2007 2007
Revenue 55.3 58.6 62.1 65.9 69.8 72.6 Terminal Value
COGS 38.0 39.9 41.6 43.5 45.4 47.2
Gross profit 17.3 18.8 20.5 22.4 24.4 25.4
SG&A 12.2 12.3 12.4 12.5 13.3 13.8
Depreciation 2.1 2.3 2.5 2.7 2.9 2.9
EBIT 3.0 4.1 5.6 7.2 8.3 8.7
Tax 1.2 1.7 2.2 2.9 3.3 3.5
EBIAT 1.8 2.5 3.3 4.3 5.0 5.2

Revenue growth 6% 6% 6% 6% 4% 10%

6% 6% 6% 6% 4% 10%
5% 5% 5% 5% 4% 8%
0% 0% 0% 0% 0% 8%
COGS 69% 68% 67% 66% 65% 65%
SG&A 22% 21% 20% 19% 19% 19%
Tax rate 40% 40% 40% 40% 40% 40%

FCFF
EBIAT 1.8 2.5 3.3 4.3 5.0 5.2 EBIT(1-T) =
plus D&A 2.1 2.3 2.5 2.7 2.9 2.9
Minus NWC 1.4 1.5 1.6 1.7 0.0
Minus Capex 4 3.5 3.6 3.8 2.9
FCFF -0.6 0.8 1.8 2.4 5.2 52.303272
DCF -0.584909 0.6839247 1.3211874 1.6185041 3.2476217 32.476217
EV 38.762545
Debt 12
Equity Value 26.762545
Share price 45.826276
Scenario 1

EBIT - Interest = PBT Tax is paid on PBT

2000-100 1900 500 0.2631579

EBIAT
EBIAT peer avg
EBITDA 18

EV/EBITDA 20
P/E Ev/18 = 20
Ev=18*20
360
EV/EBIAT 16.1
EV/1.8 = 16.1
EV 28.98
Debt 12
Equity Value 16980000
Share price 29.0753

P/E 13.5
P/2.23 = 13.5
P 30.105