Ch19_SSol - Problem 19.6 Tsingtao Brewery Company (A) As...

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Problem 19.6 Tsingtao Brewery Company (A) Actual 1 2 3 4 5 Sales Forecast Assumption 2000 2001 2002 2003 2004 2005 Sales growth rate assumption 15% 15% 15% 15% 15% Sales 3,448.3 3,965.5 4,560.4 5,244.4 6,031.1 6,935.8 Calculation of Discounted Cash Flow Value NOPAT 3.6% 145.1 142.8 164.2 188.8 217.1 249.7 Depreciation and amortization 7.5% 257.6 276.9 297.7 320.0 344.0 369.8 Operating cash flow 402.7 419.7 461.9 508.8 561.1 619.5 Less additions to net working capital 1.0% 134.8 (39.7) (45.6) (52.4) (60.3) (69.4) Less capital expenditures 2.5% 1,330.0 (99.1) (114.0) (131.1) (150.8) (173.4) Free cash flow (FCF) 1,867.5 280.9 302.2 325.3 350.0 376.8 Terminal value (and assumed growth rate) 1.0% 4,228.0 Expected FCF for discounting 280.9 302.2 325.3 350.0 4,604.8 Present value factor (and discount rate) 10.00% 0.9091 0.8264 0.7513 0.6830 0.6209 Discounted FCF 255.4 249.8 244.4 239.1 2,859.2 Cumulative discounted FCF 3,847.8 Less present value of debt capital (2,093.0) Residual equity value
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