Group 4 - Case 9 V1

Group 4 - Case 9 V1 - Group 4 Case 9 General Electric...

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Group 4 Case 9 General Electric Corporation (GE) All numbers except share price are in thousands Cost of Equity 10.50% Return on new Investment 12.00% WACC 7.50% 1a Current Stock Price 17.49 1b Dividend 0.56 2a # Shares Outstanding 10,650,000 2b Payout Ratio 40% 3 Growth next 5 years 13.27% Dividend Discount Method 5a Year 0 1 2 3 4 5 5b Dividend 0.56 0.63 0.72 0.81 0.92 1.04 5c L-term Growth 7.20% 5d Price at year 5 34.96 Present Value 0.57 0.59 0.60 0.62 21.86 5e Current Price using DDM $24.24 6 Enterprise Value Method 31-Dec-09 31-Dec-08 31-Dec-07 Average 6a)i EBIT/Sales 0.19 0.25 0.29 0.24 6a)ii Tax Rate (0.11) 0.05 0.16 0.035 6a)iii PPE/Sales 0.66 0.49 0.45 0.53 6a)iv Depreciation 10,636,000 11,492,000.00 10,278,000.00 Depr/PPE 0.10 0.13 0.13 0.12 Net Working Cap 277,656,000 (151,899,000) (149,782,000) 6a)v NWC/Sales 1.77 (0.83) (0.87) 0.02 6b Year Current 1 2 3 4 5 6 7 8 6c Sales 156,783,000 177,588,104 201,154,046 227,847,187 258,082,509 292,330,058 313,377,822 335,941,025 6d PPE 103,323,000 94,599,084 107,152,383 121,371,504 137,477,503 155,720,767 166,932,663 178,951,814 6d NWC 277,656,000 4,238,278 4,800,698 5,437,750 6,159,340 6,976,684 7,479,005 8,017,494 Depreciation 11,474,400 12,997,053 14,721,762 16,675,339 18,888,157 20,248,104 21,705,968 6d EBIT 42,967,265 48,669,021 55,127,401 62,442,807 70,728,967 75,821,453 81,280,597 EBIT*(1-T) 41,465,412 46,967,872 53,200,509 60,260,216 68,256,747 73,171,233 78,439,562 Depreciation 11,474,400 12,997,053 14,721,762 16,675,339 18,888,157 20,248,104 21,705,968 Capital Investment (8,723,916) 12,553,299 14,219,121 16,105,999 18,243,265 11,211,895 12,019,152 Inc in NWC (273,417,722) 562,420 637,053 721,589 817,344 502,321 538,488 (8,017,494) 6e Free Cash Flow 335,081,449 46,849,207 53,066,097 60,107,968 68,084,295 81,705,121 87,587,889 8,017,494 6f Value in Year 5 27,235,040,174 6g PV of FCF 311,703,674 40,540,147 42,716,115 45,008,878 47,424,703 52,941,774 52,794,029 4,495,427 Enterprise Value 597,624,747 Debt 471,269,000 Cash 72,260,000 Equity Value 198,615,747
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This note was uploaded on 07/16/2011 for the course FIN M0110 taught by Professor Kwak during the Spring '11 term at Delaware State.

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Group 4 - Case 9 V1 - Group 4 Case 9 General Electric...

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