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BV 13-2

# BV 13-2 - 13-2 BV You decide to value a steady-stare...

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13-2 BV You decide to value a steady-stare company using probability-weighted scenario analysis. In Scenario 1, NOPLAT is expected to grow at 6 percent and ROIC equals 16% . In Scenario 2, NOPLAT is expected to grow at 2% and ROIC equals 8%. Next year’s NOPLAT is expected to equal \$100 million and the weighted average cost of capital is 10%. Using the key value driver formula, what is the enterprise value in each scenario? For each scenario is equally likely, what is the enterprise value for the company? Solution: Scenario 1: NOPLAT for the next year (T+1) = \$100 mn g = 6% ROIC = 16% WACC = 10% Enterprise Value (Continuing value) using Value Driver approach:

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