Adv Finance

Adv Finance - CASE WRITE-UP PARAMOUNT Katherine Janeway John Lilly Shannon McArthur Kristen Ostrom LeeAnn Thore Period 1 2 3 4 5 1993 1994 1995

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Unformatted text preview: CASE WRITE-UP: PARAMOUNT Katherine Janeway John Lilly Shannon McArthur Kristen Ostrom LeeAnn Thore Period 1 2 3 4 5 1993 1994 1995 1996 1997 1998 EBITDA 560.5 660.56 737 790.8 848.4 910.1 (Depreciation) 221.1 162.00 172 184 196 209 EBIT 339.40 498.56 565.00 606.80 652.40 701.10 (Taxes) 125.58 184.47 209.05 224.52 241.39 259.41 EBIT (1-Tc) 213.82 314.09 355.95 382.28 411.01 441.69 Depreciation 221.1 162.00 172 184 196 209 (Capital Expenditure) 111.8 160.10 177.3 176.7 202.9 216.6 (Change in Working Capital) 97.8 45.60 62.1 66.5 71.2 76.2 Free Cash Flows 225.32 270.39 288.55 323.08 332.91 357.89 Debt forecast for APV 1002.90 1058.75 1117.71 1179.96 1245.67 1315.05 95 asset sold PV of FCF using WACC $225.32 $246.84 $240.47 $245.80 $231.22 $226.92 $750.05 PV of FCF using R A $225.32 $245.19 $237.26 $240.89 $225.08 $219.42 $740.03 Tax Shield using R A $371.07 $391.74 $413.55 $436.59 $460.90 $486.57 PV of Tax Shield $371.07 $355.22 $340.05 $325.52 $311.62 $298.30 Equity 4129.8 Debt 1002.9 Return on Equity 10.75% Return on Debt 7.24% Tax Rate 37.00% Risk Free Rate 6.25% Beta of Equity of Paramount 1 Market Risk Premium 4.50% WACC 9.54% GR of 93-94 of FCF 20.00% GR of 94-95 of FCF 6.72% GR of 95-96 of FCF 11.97% GR of 96-97 of FCF 3.04% GR of 97-98 of FCF 7.50% Average Growth Rate of FCF 9.85% Slowing of Growth Rate of FCF 2.50% V L=VU+PVTS Actual Growth of FCF 7.35% V u= $10,161.98 Terminal Value of FCF using WACC $17,507.64 Terminal Value of FCF using R A $13,095.85 Terminal Value of Debt shield w/ R A $2,901.79 Assume debt stops growing after 1998 PV of Terminal Value of FCF using WACC $11,100.67 PV of Terminal Value of FCF using RA $8,028.78 PV of Terminal Value of Debt Tax Shield $1,779.02 Avg Value of Paramount PV (WACC) $13,267.31 13605.045 PV (APV) $13,942.78$13,942....
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Adv Finance - CASE WRITE-UP PARAMOUNT Katherine Janeway John Lilly Shannon McArthur Kristen Ostrom LeeAnn Thore Period 1 2 3 4 5 1993 1994 1995

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