0 73 342 119 20 20 ucf 11 all equity value

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Unformatted text preview: 1’s unlevered beta = .6/[1+1.26x(1­.34)] = 0.3276 Traded supplier 2’s unlevered beta = .4/[1+.8x(1­.34)] = 0.2618 Delphi’s unlevered beta = [0.3276+0.2618]/2 = 0.2947 Into CAPM gives: Ro = 4% + 0.2947x[15%­4%] = 7.24% 10 Delphi’s Unlevered Future Cash Flows Year Year 1 2 3 4 5 6 7 + EBIT(1­t) 4,092 4,093 4,357 5,677 5,791 5,907 6,025 … +Depr 1,000 1,000 1,000 1,000 ­ ­ ­ … =OCF 5,092 5,093 5,357 6,677 5,791 5,907 6,025 … ­ ΔNWC (500) (500) (500) (500) ­ ­ ­ … ­Capex (1,000) (1,000) (1,000) (1,000) ­ ­ ­ … =UCF 3,592 3,593 3,587 5,177 5,791 5,907 6,025 … 0.0% 7.3% 34.2% 11.9% 2.0% 2.0% %ΔUCF 11 … All-equity value under current All-equity management management PV(CFs yrs 1­5) = 3,592/1.0724 + 3,593/1.07242 + 3,857/1.07243 + 5,177/1.07144 + 5,791/1.07245 = $17,599 TV as of year 5 (CFs yrs 6 on) = 5,907/(.0724­.02) = $112,723 TV as of year 0 (CFs yrs 6 on) = $112,723/1.07245 = $79,475 All equity value = $17,599 + $ 79,475 = $97,074 12 2. All-equity value under NEW management Recalculate your future UCFs usi...
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This document was uploaded on 03/09/2014 for the course COMM 371 at The University of British Columbia.

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