Fcff2st - Two-Stage FCFF Discount Model This model is designed to value a firm with two stages of growth an initial period of higher growth and a

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 Two-Stage FCFF Discount Model Page  Two-Stage FCFF Discount Model This model is designed to value a firm, with two stages of growt period of higher growth and a subsequent period of stable g For a richer version of this model, try the fcffginzu.xls spreadsheet. Assumptions 1. The firm is expected to grow at a higher growth rate in the first period. 2. The growth rate will drop at the end of the first period to the stable growth rate. The user has to define the following inputs: 1. Length of high growth period 2. Expected growth rate in earnings during the high growth period. 3. Capital Spending, Depreciation and Working Capital needs during the high growth period. 4. Expected growth rate in earnings during the stable growth period. 5. Inputs for the cost of capital. (Cost of equity, Cost of debt, Weights on debt and equity) Inputs to the model
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 Two-Stage FCFF Discount Model Page  Current EBIT = $5,186.00 Current Interest Expense = $118.00 Current Capital Spending $2,152.00 $1,228.00 Tax Rate on Income = 28.49% Current Revenues = $16,701.00 Current Non-cash Working Capital $3,755.00 Chg. Working Capital = $499.00 Last year Cash and Marketable Securities $500.00 Value of equity options issued by fi $1,500.00 Book Value of Debt = $1,479.00 $1,315.00 Book Value of Equity = $12,941.00 $12,156.00 Weights on Debt and Equity Is the firm publicly traded ? Yes ( Yes or No) If yes, enter the market price per share = $125.50 (in currency) & Number of shares outstanding = 993.57 (in #) $1,822.00 ( in currency) If no, do you want to use the book value debt ratio ? No (Yes or No) If no, enter the debt to capital ratio to be used = (in percent) Enter length of extraordinary growth period = 5 (in years)
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This note was uploaded on 06/28/2010 for the course MKTG 00HP01 taught by Professor Himanshu during the Spring '10 term at Indiana Institute of Technology.

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Fcff2st - Two-Stage FCFF Discount Model This model is designed to value a firm with two stages of growth an initial period of higher growth and a

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