AppleiTVsoln - FiniteLifeAnalysis GrowthinTotalMarket=...

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Finite Life Analysis Page 1 Summary of Inputs / Cost of Capital Computation Growth in Total Market = 4% Target Market Share = 5% Allocated Expenses EBITDA Margin = NA Item Current Expen Growth rate Proportion allocated Riskfree rate = 3.00% G&A 500000 5% 10% Tax Rate = 40% Advertising 1000000 5% - Inflation rate = 2% Price per unit = $1,000.00 Variable cost per unit = $400.00 Capacity Cost Marketing cost (Outside retail 10% Unit capacity = 2000 Marketing cost (Apple Stores) 5% Used by computer displays  600 Percent of units sold- outside 80% Growth in computer displays 15% Cost of new capacity = $500,000 (in current $) Share Price =  $90.00  Number of Shares Outstandin  900,000.00  (in 000s) Pre-tax cost of debt = 5.25% Interest expense $0.00
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Finite Life Analysis Page 2 Book Value of Debt = $0.00 Average Maturity of Debt =  3.00  Market Value of Equity =  $81,000,000  Market Value of Interest beari  $-    PV of Operating Leases =  $1,375,914  Total Debt outstanding =  $1,375,914  MV Debt/Equity Ratio = 1.70% MV Debt/Capital Ratio = 1.67% Unlevered Beta for Business =  1.2647  Levered Beta =  1.2776  Market Risk Premium = 6.00% Cost of Equity = 10.67% After-tax Cost of Debt = 3.15% Cost of Capital = 10.54% Year 0 1 2 3 4 5 6 7 8 9 10 Total Market 30000.00 31200.00 32448.00 33745.92 35095.76 36499.59 37959.57 39477.95 41057.07 42699.35 44407.33 Market Share 0.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.00% 5.00% 5.00% 5.00% Units sold 780.00 973.44 1181.11 1403.83 1642.48 1897.98 1973.90 2052.85 2134.97 2220.37  - Outside retailers 624.00 778.75 944.89 1123.06 1313.99 1518.38 1579.12 1642.28 1707.97 1776.29
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Finite Life Analysis Page 3  - Apple Stores 156.00 194.69 236.22 280.77 328.50 379.60 394.78 410.57 426.99 444.07 Price per unit $1,000.00 $1,020.00 $1,040.40 $1,061.21 $1,082.43 $1,104.08 $1,126.16 $1,148.69 $1,171.66 $1,195.09 Variable cost per unit $400.00 $408.00 $416.16 $424.48 $432.97 $441.63 $450.46 $459.47 $468.66 $478.04 Marketing cost per unit (retail) $100.00 $102.00 $104.04 $106.12 $108.24 $110.41 $112.62 $114.87 $117.17 $119.51 Marketing cost per unit (Apple) $50.00 $51.00 $52.02 $53.06 $54.12 $55.20 $56.31 $57.43 $58.58 $59.75 Revenues  $780,000   $992,909   $1,228,824   $1,489,756   $1,777,875   $2,095,522   $2,222,929   $2,358,083   $2,501,455   $2,653,543   - Production Costs  $312,000   $397,164   $491,530   $595,902   $711,150   $838,209   $889,172   $943,233   $1,000,582   $1,061,417   - Marketing Costs (Retail stores)  $62,400   $79,433   $98,306   $119,180   $142,230   $167,642   $177,834   $188,647   $200,116   $212,283   - Marketing Costs (Apple stores)  $7,800   $9,929   $12,288   $14,898   $17,779   $20,955   $22,229   $23,581   $25,015   $26,535   - Deprec'n (including capacity)  $200,000   $200,000   $226,530   $226,530   $226,530   $226,530   $226,530   $226,530   $226,530   $226,530   - Allocated G&A  $102,500   $118,773   $136,652   $156,272   $177,780   $201,333   $212,850   $225,032   $237,916   $251,544   - Advertising Exp.  $126,000   $132,300   $138,915   $145,861   $153,154   $160,811   $168,852   $177,295   $186,159   $195,467  Operating Profit  $(30,700)  $55,310   $124,603   $231,112   $349,252   $480,041   $525,461   $573,766   $625,136   $679,766   Taxes   $(12,280)  $22,124   $49,841   $92,445   $139,701   $192,017   $210,184   $229,506   $250,055   $271,906  EBIT(1-t)  $(18,420)  $33,186   $74,762   $138,667   $209,551   $288,025   $315,277   $344,259   $375,082   $407,860   + Deprec'n  $200,000   $200,000   $226,530   $226,530   $226,530   $226,530   $226,530   $226,530   $226,530   $226,530   + Fixed Allocated Exp (1-t)  $31,500   $33,075   $34,729   $36,465   $38,288   $40,203   $42,213   $44,324   $46,540   $48,867   - Cap Ex  $2,200,000   $-     $-     $-     $-     $-     $-     $-     $-     $-     - Opp. Cost of Capacity  $530,604   $-     $-     - Chg in WC  $51,480   $14,052   $15,570   $17,222   $19,016   $20,965   $8,409   $8,920   $9,463   $10,038   $(175,134)
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