Weighted average cost of capital wacc weighted

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

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

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

WACC PV of CF PV of Terminal Value ENTERPRISE VALUE
10.5% 94,336 + 300,497 = 394,833

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
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