Bobco Rawhide Company

EPS 2.15
Payout Ratio 45%
ROE 17%
Required Return 13%

A) Growth Rate 9.35%

Value without Growth 16.54

Value of Growth Opportunities 9.97
B) Value of Stock 26.51

C) Comstant Growth DDM Value 26.51

 Single-Stage Growth Data
Stock Price $ 24.00
D0 $ 1.25
Growth Rate 8%
Required Return 15%

Two-Stage Growth Data

Stock Price $ 24.00
D0 $ 1.25
Growth Rate 1 20%
Growth Rate 2 8%
Rapid Growth Time 3.00 years
Required Return 15%

Three-Stage Growth Data

Stock Price $ 24.00
D0 $ 1.25
Growth Rate 1 20%
Growth Rate 2 8%
Rapid Growth Time 3.00 years
Transition Period 5.00 years
Required Return 15%

Valuation
Single-Stage $ 19.29
Two-Stage #VALUE!
Three-Stage #VALUE!
 The Miracle Clean Company
Free Cash Flow Forecast
2008 2009 2010
Depreciation 15,000 18,000 21,000
EBIT 125,000 145,000 165,000
Investment in Operating Assets 35,000 25,000 10,000
Net Operating Profit After Tax 81,250 94,250 107,250
Operating Cash Flow After Tax 96,250 112,250 128,250
Free Cash Flow 61,250 87,250 118,250

Tax Rate 35%

Current Market Value of Debt 250,000
Non-Operating Assets 64,000
FCF Growth Rate after 2010 8%
WACC 11%
Common Shares Outstanding 200,000

Value of Firm 3,325,139.33

Value of Equity 3,139,139.33
Per Share Value 15.70

FCF2008 without New Products 55,000.00

FCF Growth Rate 8%

Value of Firm 1,833,333.33

Value of Equity 1,647,333.33
Per Share Value 8.24
 Eli Lilly & Co. This data is from 19 May 2006. The calculated intrinsic value is $7.94
Current Price 51.01 less than the actual market price of the stock. If the required return is
Quarterly Growth 1.80% actually 10% per year, then the stock is currently overvalued and should
Annualized Growth 7.39% not be purchased.
Required Return 10%
Value $ 64.29 Undervalued by $13.28

Date Cash Dividend % Change

11-May-01 0.28
13-Aug-01 0.28 0.00%
13-Nov-01 0.28 0.00%
13-Feb-02 0.31 10.71%
13-May-02 0.31 0.00%
13-Aug-02 0.31 0.00%
13-Nov-02 0.31 0.00%
12-Feb-03 0.34 8.06%
13-May-03 0.34 0.00%
13-Aug-03 0.34 0.00%
12-Nov-03 0.34 0.00%
11-Feb-04 0.36 5.97%
12-May-04 0.36 0.00%
11-Aug-04 0.36 0.00%
10-Nov-04 0.36 0.00%
11-Feb-05 0.38 7.04%
11-May-05 0.38 0.00%
11-Aug-05 0.38 0.00%
10-Nov-05 0.38 0.00%
13-Feb-06 0.40 5.26%
11-May-06 0.40 0.00%