WEIGHTED AVERAGE COST OF CAPITAL WACC Weighted Average Cost of Capital 121 Cost

Weighted average cost of capital wacc weighted

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WEIGHTED AVERAGE COST OF CAPITAL (WACC) Weighted Average Cost of Capital 12.1% Cost of Equity Cost of Debt Risk Free Rate 3.0% Cost of Debt 8.0% Expected Market Return 11.0% Tax Rate 35.0% Beta 1.5 After Tax Cost of Debt 5.2% Cost of Equity 15.00% E / (D+E) 70.0% D / (D+E) 30.0% FIRM VALUE: PERPETUITY GROWTH RATE METHOD Growth Rate in Perpetuity 3.5% Terminal Value 39,856 Firm Value 32,123 FIRM VALUE: EBITDA MULTIPLE METHOD EBITDA Multiple 6.0x Terminal Value 48,187
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Hornbeck Offshore (000s) FREE CASH FLOW (FCF) 2015 2016 2017 2018 2019 EBIT 4,667 5,134 5,647 6,212 6,833 Tax 1,634 1,797 1,977 2,174 2,392 Tax Rate 35.0% 35.0% 35.0% 35.0% 35.0% Tax-Effected EBIT 3,034 3,337 3,671 4,038 4,442 Plus: Depreciation 818 900 990 1,089 1,198 Amortization 0 0 0 0 0 Less: Capital Expenditures (900) (975) (1,050) (1,125) (1,200) Change in Working Capital (693) (859) (945) (1,039) (1,143) Free Cash Flow 2,259 2,403 2,666 2,963 3,296 WEIGHTED AVERAGE COST OF CAPITAL (WACC) Weighted Average Cost of Capital 12.1% Cost of Equity Cost of Debt Risk Free Rate 3.0% Cost of Debt 8.0% Expected Market Return 11.0% Tax Rate 35.0% Beta 1.5 After Tax Cost of Debt 5.2% Cost of Equity 15.00% E / (D+E) 70.0% D / (D+E) 30.0% PRESENT VALUE OF CASH FLOWS (PV of CF) 2015 2016 2017 2018 2019 Year 1 Year 2 Year 3 Year 4 Year 5 Discount Factor 0.89 0.80 0.71 0.63 0.57 Present Value of Cash Flows 2,016 1,914 1,895 1,879 1,865 FIRM VALUE: PERPETUITY GROWTH RATE METHOD Growth Rate in Perpetuity 3.5% WACC PV of CF PV of Terminal Value Firm Value 12.1% 9,568 + 22,555 = 32,123 FIRM VALUE: EBITDA MULTIPLE METHOD EBITDA Multiple 6.0x WACC PV of CF PV of Terminal Value Firm Value 12.1% 9,568 + 27,270 = 36,838
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Discounted Cash Flow Analysis Google, Inc. (000s) Actual Proforma FREE CASH FLOW (FCF) 2015 2016 2017 2018 2019 2020 EBITDA 27,048 32,863 39,110 45,722 52,347 58,983 EBIT 20,612 24,887 29,499 34,114 39,371 Tax 5,565 6,595 7,640 8,972 10,433 ENTERPRISE Tax Rate 27.0% 26.5% 25.9% 26.3% 26.5% Tax-Effected EBIT 15,047 18,292 21,859 25,142 28,938 + or - off bala Plus: Adjusted ENT Depreciation 6,306 7,484 8,681 9,908 10,555 Amortization/other non-cash charges 5,945 6,739 7,542 8,325 9,057 Less: YE Fun +- Adjustments Plus: YE Exc Less: EQUITY VALU Capital Expenditures 11,271 11,837 12,459 12,883 13,068 Change in Working Capital (499) (473) (504) (546) (544) Diluted Share Free Cash Flow 16,526 21,151 26,127 31,038 36,026 Intrinsic Value WEIGHTED AVERAGE COST OF CAPITAL (WACC) Weighted Av 10.5% Cost of Equity Cost of Debt Risk Free Rat 3.0% Cost of Debt 4.0% 0.03 Expected Mar 10.0% Tax Rate 30.0% Beta 1.25 After Tax Cost of Debt 2.8% Cost of Equity 11.75% E / (D+E) 86.0% D / (D+E) 14.0% PRESENT VALUE OF CASH FLOWS (P 2016 2017 2018 2019 2020 Year 1 Year 2 Year 3 Year 4 Year 5 Discount Factor 0.91 0.82 0.74 0.67 0.61 Present Value of Cash Flows 14,956 17,323 19,366 20,821 21,871 FIRM VALUE: PERPETUITY GROWTH RATE METHOD Growth Rate i 3.0% WACC PV of CF PV of Terminal Value ENTERPRISE VALUE 10.5% 94,336 + 300,476 = 394,812 FIRM VALUE: EBITDA MULTIPLE METHOD EBITDA Multi 8.4x
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WACC PV of CF PV of Terminal Value ENTERPRISE VALUE 10.5% 94,336 + 300,497 = 394,833
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WACC 10.5% LT growth 3.0% 8.4x Gordon Growth EBITDA Multiple E VALUE 394,833 394,812 ance sheet items 0 0 TERPRISE VALUE 394,833 394,812 nded Debt 17041 17041 cess Cash 0 0 UE 377,792 377,771 es Outstanding 485.6 485.6 e Per Share $777.99 $777.95 8
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