This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: 1 Demonstration of business valuation (presentation example) Discount Rate 10% Terminal Growth 6% 1 2 3 4 5 6 7 Asset Value 10.00 12.00 14.40 17.28 20.74 23.43 26.47 Earnings 1.20 1.44 1.73 2.07 2.49 2.81 3.18 Net Investment 2.00 2.40 2.88 3.46 2.69 3.04 1.59 Free Cash Flow (0.80) (0.96) (1.15) (1.38) (0.20) (0.23) 1.59 Growth Rate 20% 20% 20% 20% 20% 13% 13% Horizon: 10 years Horizon: 8 years Terminal Value Terminal Value Termi PV of TV PV of TV PV of Cash Flows PV of Cash Flows PV of Ca Total Value Total Value To 2 Calculation of terminal value (at year 6) under alternative assumptions P/E is M/B is 5% 7% 11 1.4 Terminal Value 31.7 52.9  PV of TV 17.9 29.9     PV of Cash Flows      Total Value 17.92 29.87     3 Sensitivity to discount rate 9% 10% 11% 12% Growth Rate Growth Rate Benchmark No growth after year 8 8 9 10 28.06 29.74 31.53 3.37 3.57 3.78 1.69 1.79 1.89 1.68 1.78 1.89 6% 6% 6% Horizon: 6 years inal Value PV of TV ash Flows otal Value...
View
Full
Document
 Spring '08
 ORBAY
 Corporate Finance

Click to edit the document details