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Week 3 Valuation

The document contains financial projections and calculations for a company, including revenue, costs, and capital expenditures over a specified time period. It also discusses various methods for valuing equity and debt, including Adjusted Present Value (APV) and Enterprise Value (EV) methods, along with relevant metrics such as WACC and tax shields. Key figures include growth rates, EBIT, and the company's capital structure ratios.

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Vvb Satyanarayana
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28 views9 pages

Week 3 Valuation

The document contains financial projections and calculations for a company, including revenue, costs, and capital expenditures over a specified time period. It also discusses various methods for valuing equity and debt, including Adjusted Present Value (APV) and Enterprise Value (EV) methods, along with relevant metrics such as WACC and tax shields. Key figures include growth rates, EBIT, and the company's capital structure ratios.

Uploaded by

Vvb Satyanarayana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Q1-8

Expected R
Growth rat

1000
5%

COGS
SGA
Depr.
Capex
Changes in

550
200
100
100
0

Time
Revenue
COGS
SGA
Depr
EBIT
Taxes
Net Opera
Depr
Capex
Changes in
FCF

1
1000
550
200
100
150
51
99
100
100
0
99

Rf
MRP
Average Beta Equity
D/E Ratio
Average Beta Debt
D
E
V

Value
No of shares
Price per share

Equity
D/E
Debt
Tax shield
APV

2.50%
4%
1.5
25%
0.15
0.25
1
1.25

Tax

Re
Rd

34%

8.500%
3.100%

WACC

Ra
7.42%
7.74%
Tax shield aAsset
Debt
Beta Asset
1.23 1.3087983
Beta Equity
1.23 1.3087983
D/E
0
0
Re

7.42%

1000000
4090.9090909 3800.4628903
4090909091 3800462890
6000000
681.82
633.41

4090.9090909
0.38
1554.5454545 1554545455
213.69762313 213697623.13
4304.606714
4304606714

Value
Debt
Equity

4090.9090909
1000
3090.9090909

D/E
D
E
V

32.35%
0.3235294118
1
1.3235294118

Rd

3%

EV
4090.9090909
Tax Shield 421.48760331
APV
4512.3966942
4512396694
E
D
D/E
Re

3512.3966942
1000
28.47%
8.25%

7.21%

3800.463
1000
2800.463

shares bought 1.466667 million


Outstanding 4.533333 million

0.244444
0.755556
1
interest
Ra

30 million
7.42%

752.0661

70.25

3512.397
585.3994

-96.42

WACC
EV

6.86%
5319.9551366 5319955137

1.32967
4.67033

1329670
4670330

1466667

Bears
Beta equity
Market Value e
Riskless debt
D/E
D
E
V
Unlevering

1
120 billion
30 billion
0.25
0.25
1
1.25

Method 1
Ra
Beta Asset

Rf
MRP
Tax
Beta Debt

Tax shield as risky as debt


6.29%
0.86
0.86

Sears
EBIT
Depr
change in NW
Capex

250 million
0
0
0

target D/E
Rd
D
E
V

Enterprise Value Method


EV
Debt
Equity

3159.569
1579.784
1579.784

Adjusted Present Value Method

WACC

discounted by Ra and add tax

EV
2622.442
Tax Shield 537.1267
APV
3159.569
Equity Valuation Method
EV
Equity
Debt

3159.569
1579.784
1579.784

Interest

2%
5%
34%

Re

7.00%

Method 2
Ra

Tax shield as risky as assets


6.00%

Beta Asset

1
4%
1
1
2

0.8
0.8

Tax shield as risky as debt


=> Method 1
Relever
Re

5.22%

Tax shield as risky as a

7.80%

Re

EV
Debt
Equity

3101.504
1550.752
1550.752

WACC

iscounted by Ra and add tax shield


EV
2750
Tax Shield 351.5038
APV
3101.504

63.19137

EV
Equity
Debt

3101.504
1550.752
1550.752

Interest

ax shield as risky as assets

8.0%

5.32%

62.03008

Bears
Beta equity
2.5
Market Value equity
billion
Riskless debt
billion
D/E
0.35
D
0.35
E
1
V
1.35
Unlevering

Method 1
Ra
Beta Asset

Rf
MRP
Tax
Beta Debt

Tax shield as risky as debt


7.42%
2.08

Sears
EBIT
Depr
change in NW
Capex

150 million
0
0
0

target D/E
Rd
D
E
V

Enterprise Value Method


4235382871
1609445491

EV
Debt
Equity

5738.079
1580.051
4158.029

Adjusted Present Value Method

WACC

discounted by Ra and add t

EV
1334.232
Tax Shield 537.2173
APV
1871.449
Equity Valuation Method
EV
Equity
Debt

2374.032
793.9814
1580.051

Interest

3%
4%
34%

Re

12.50%

Rd

3.50%

0.25

Method 2
Ra

Tax shield as risky as assets


7.74%

Beta Asset 1.916667

38.00%
3%
38.00%
1
1.38

Beta Equity1.9166666667

Tax shield as risky as debt


=> Method 1
Relever
Re

6.73%

Growth

5%

8.53%

EV
Debt
Equity

4235.3828714
1609.4454911
2625.9373803

iscounted by Ra and add tax shield

212229271.16

47.40153

EV
3800.4628903
Tax Shield 212.22927116
APV
4012.6921615

EV
Equity
Debt

3330.0383911
704.10101088
2625.9373803

Tax shield as risky as assets

Re

9.53%

WACC

7.45% EV
Debt
Equity

84.70765743

Debt

1500 million

80.25384323
-4.4538142

Interest

48.28336

4235.383
1500
2735.383

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