Forecast Year FCF Discounted FCF Prior-year debt Interest rate, %

1 100.0 92.59 1,000.0 0.08

2 105.0 90.02 1,040.0 0.08
3 110.3 87.56 1,081.6 0.08
4 115.8 85.12 1,124.9 0.08
5 121.6 82.76 1,169.9 0.08
6 127.6 80.41 1,216.7 0.08
7 134.0 78.19 1,265.3 0.08
8 140.7 76.02 1,315.9 0.08
9 147.7 73.89 1,368.6 0.08
10 155.1 71.84 1,423.3 0.08
Continuing value 1,480.2 0.08

Sum of discounted FCFs 818.39

Marginal tax rate, % 35.00

Unlevered cost of equity, % 10.00

FCF / (1 + (Interest rate, %))^Forecast Year

FCF = 100.0 / (1 + 0.08)^1 = 92.59
Interest Tax Shield (ITS) = Interest Payment * Marginal Tax Rate
Discounted ITS = ITS / (1 + Interest rate, %)^Forecast Year
PV of FCF and ITS = Sum of Discounted FCF + Sum of Discounted ITS
Midyear Adjustment Factor = 1 / (1 + Interest rate, %)
Value of Operations = PV of FCF and ITS * Midyear Adjustment Factor
Interest Payment Marginal tax rate, % Interest tax shield (ITS) Discounted ITS
80.00 0.35 28.00 25.93
83.20 0.35 29.12 24.97
86.53 0.35 30.28 24.04
89.99 0.35 31.50 23.15
93.59 0.35 32.76 22.29
97.34 0.35 34.07 21.47
101.22 0.35 35.43 20.67
105.27 0.35 36.85 19.91
109.49 0.35 38.32 19.17
113.86 0.35 39.85 18.46
118.42 Continuing value

Sum of discounted ITCs 220.05

PV of FCF and ITS 1,038.44

Midyear adjustment factor 0.93
Value of operations 961.52