Homework_4_Valuation_Assignment - FIN 340 HOMEWORK#4...

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FIN 340 HOMEWORK #4 VALUATION ASSIGNMENT: ANHEUSER-BUSCH (NYSE:BUD) Use a discounted cash flow approach to value Anheuser Busch shares. Use the financial data from Value Line and the following assumptions to forecast 10 years of cash flows, 2007-2016, and estimate the continuation value after 10 years (see Excel Spreadsheet): 1. Sales Growth of 3.71% per year 2. Operating Margin grows 0.22% per year. So, in 2006, the operating margin is forecasted to be 25.5%. Assume that 2007 operating margin will be 26.5%. (Note: Value Line’s Operating Margin does not include depreciation charges.) 3. Annual Depreciation Growth of 4.1% per year 4. Capital Expenditures growth of 3.15% per year 5. Working Capital Required is -0.83% of annual sales 6. Effective Corporate Tax Rate is 38.6% For the discount rate, use the weighted average cost of capital and the Capital Asset Pricing Model. Value Line provides the firm’s equity β (0.65). Calculate the average market risk premium from 1990 until 2006 using the Market-Data.xls file at Blackboard.
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This note was uploaded on 09/21/2009 for the course B 340 taught by Professor Narg during the Spring '09 term at Washington University in St. Louis.

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Homework_4_Valuation_Assignment - FIN 340 HOMEWORK#4...

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