If not enter the rate of return you expect to earn on this cash assuming that

If not enter the rate of return you expect to earn on

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If not, enter the rate of return you expect to earn on this cash (assuming that it is invested at current risk lev9%Output from the programCost of Equity =9.00%Net Income =$100.00 Expected growth rate in net income10.00%Growth Rate in capital spending, depreciation and working capitalHigh GrowthStable GrowthGrowth rate in capital spending =10.00%4.00%Growth rate in depreciation =10.00%4.00%Growth rate in revenues =10.00%4.00%Working Capital as percent of revenues =5.00%(in percent)Cash builds up gets invested at 9.00%The FCFE for the high growth phase are shown below (upto 6 years)12345Terminal YearNet Income$110.00 $121.00 $133.10 $146.41 $161.05 $167.49 - (CapEx-Depreciation)$27.50 $30.25 $33.28 $36.60 $40.26 $69.36 - Change in Working Capital$5.00 $5.50 $6.05 $6.66 $7.32 $3.22 + Net Debt Cash flow$11.00 $12.10 $13.31 $14.64 $16.11 $16.75 Free Cashflow to Equity$88.50 $97.35 $107.09 $117.79 $129.57 $111.66 Dividends$33.00 $36.30 $39.93 $43.92 $48.32 PV of FCFE$81.19 $81.94 $82.69 $83.45 $84.21 PV of Dividends$30.28 $30.55 $30.83 $31.12 $31.40 Cash Build up (invested at specified$55.50 $121.55 $199.64 $291.48 $398.97 $398.97 FCFEDDMGrowth Rate in Stable Phase =4.00%4.00%FCFE (Dividends) in Stable Phase =$111.66 $111.66 Cost of Equity in Stable Phase =9.00%9.00%Price at the end of growth phase =$2,233.24 $2,233.24Additional cash build up over high growth period =$398.97FCFE DDMPresent Value of FCFE in high growth phase =$413.48 $154.18 Present Value of Terminal Price =$1,451.45 $1,451.45Present Value of Cash build up in terminal year =$259.30Value of the stock =$1,864.93 $1,864.93
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  • Spring '11
  • tnaga
  • Generally Accepted Accounting Principles, FCFE

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