Discounted Cash Flow valuation

Market Assumptions
Riskfree rate
Market Risk Premium

3.50%
5.50%

Equity Assumtions
Beta
Cost of Equity
MV of Equity est

1
9.00%
2000

Debt assumptions
Pre-Tax Cost of Debt
Effective Tax Rate
After-Tax Cost of Debt
MV of Debt est

4.50%
30%
3%
200

Firm Assumptions
Firm Value est
Debt-to-MV Ratio
WACC
Initial Cash Flow
Long-Term(Terminal) Growth Rate

2200
9.09%
8.47%
100
3%

Cal. Year Year Gr. Rate

2013
0
10%
2014
1
10%
2015
2
10%
2016
3
10%
2017
4
10%
2018
5
10%
2019
6
3%

FCF

Term Val

Total

100
100
110
110
121
121
133.1
133.1
146.41
146.41
161.051
161.051
177.1561 3336.9553 3514.1114001

PV
101.41222814
102.84440015
104.29679771
105.76970643
107.26341598
2157.7511777

Firm Value 2679.3377261

Debt Value
200
Equity Value 2479.3377261
Shares Outstanding
100
Intrinsic value/share
Market Price/share

K(e)= r(f)+B (r(m)-r(f))

CAPM model

(1-T)*PreTax_Cost of debt

After-Tax Cost of Debt