WACC Calculation

Cost of Debt 6.67%

Cost of equity 8.18%
Debt 0.37
Equity 0.63
WACC 7.62%
Stable Growth Rate 4%

Valuation of Robertson 1 2 3 4 5 Terminal

Year 2002 2003 2004 2005 2006 2007 Value
Sales 55.30 58.60 62.10 65.90 69.80 69.80
Cost of Goods 37.90 39.80 41.60 43.50 45.40 45.40
Gross Profit 17.40 18.80 20.50 22.40 24.40 24.40
S&A Expense 12.30 12.30 12.40 12.50 13.30 13.30
Depreciation 2.10 2.30 2.50 2.70 2.90 2.90
EBIT 3.00 4.20 5.60 7.20 8.20 8.20
Tax 40.00% 40.00% 40.00% 40.00% 40.00% 40.00%
EBIT ( 1-T) 1.80 2.52 3.36 4.32 4.92 4.92
Net Capex 1.70 1.00 0.90 0.90 0.00
NWC 17.14 18.17 19.25 20.43 21.64 21.64
Change in NWC 1.02 1.09 1.18 1.21 0.00
FCFF 2.10 3.78 4.94 5.71 7.82 164.07
WACC 7.62% 7.62% 7.62% 7.62% 7.62% 7.62%
EV Value 1.95 3.26 3.96 4.26 5.42 113.65
EV for the firm 132.50

Sensitivity Analysis a. WACC=10%; Growth rate in first 4 years at 6% & growth rate in st.phase at 4%
WACC 10.00%
High Growth Rate 6.00%
Stable Growth Rate 4%

Valuation of Robertson 1 2 3 4 5 Terminal

Year 2002 2003 2004 2005 2006 2007 Value
Sales 55.30 58.62 62.14 65.86 69.81 69.81
Cost of Goods 37.90 39.80 41.60 43.50 45.40 45.40
Gross Profit 17.40 18.82 20.54 22.36 24.41 24.41
Selling & Admin 12.30 12.30 12.40 12.50 13.30 13.30
Depreciation 2.10 2.30 2.50 2.70 2.90 2.90
EBIT 3.00 4.22 5.64 7.16 8.21 8.21
Tax 40.00% 40.00% 40.00% 40.00% 40.00% 40.00%
EBIT ( 1-T) 1.80 2.53 3.38 4.30 4.93 4.93
Net Capex 1.70 1.00 0.90 0.90 0.00
NWC 17.14 18.17 19.26 20.42 21.64 21.64
Change in NWC 1.03 1.09 1.16 1.23 1.23
FCFF 2.10 3.79 4.94 5.70 6.60 98.87
WACC 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
EV Value 1.91 3.13 3.71 3.90 4.10 61.39
EV for the firm 78.14

Sensitivity Analysis b WACC=8%; Growth rate in first 4 years at 5% & growth rate in st.phase at 4%
WACC 8.00%
High Growth Rate 5.00%
Stable Growth Rate 4.00%

Valuation of Robertson 1 2 3 4 5 Terminal

Year 2002 2003 2004 2005 2006 2007 Value
Sales 55.30 58.07 60.97 64.02 67.22 70.58
Cost of Goods 37.90 39.80 41.60 43.50 45.40 45.40
Gross Profit 17.40 18.27 19.37 20.52 21.82 25.18
Selling & Admin 12.30 12.30 12.40 12.50 13.30 13.30
Depreciation 2.10 2.30 2.50 2.70 2.90 2.90
EBIT 3.00 3.67 4.47 5.32 5.62 8.98
Tax 40.00% 40.00% 40.00% 40.00% 40.00% 40.00%
EBIT ( 1-T) 1.80 2.20 2.68 3.19 3.37 5.39
Net Capex 1.70 1.00 0.90 0.90 0.00
NWC 17.14 18.00 18.90 19.85 20.84 21.88
Change in NWC 0.86 0.90 0.95 0.99 1.04
FCFF 1.94 3.28 4.04 4.38 7.25 113.83
WACC 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
EV Value 1.80 2.81 3.21 3.22 4.93 77.47
EV for the firm 93.44

Sensitivity Analysis c WACC=8%; Growth rate in first 4 years at 0% & growth rate in st.phase at 0%
WACC 8.00%
High Growth Rate 0.00%
Stable Growth Rate 0.00%

Valuation of Robertson 1 2 3 4 5 Terminal

Year 2002 2003 2004 2005 2006 2007 Value
Sales 55.30 55.30 55.30 55.30 55.30 55.30
Cost of Goods 37.90 39.80 41.60 43.50 45.40 45.40
Gross Profit 17.40 15.50 13.70 11.80 9.90 9.90
Selling & Admin 12.30 12.30 12.40 12.50 13.30 13.30
Depreciation 2.10 2.30 2.50 2.70 2.90 2.90
EBIT 3.00 0.90 -1.20 -3.40 -6.30 -6.30
Tax 40.00% 40.00% 40.00% 40.00% 40.00% 40.00%
EBIT ( 1-T) 1.80 0.54 -0.72 -2.04 -3.78 -3.78
Net Capex 1.70 1.00 0.90 0.90 0.00
NWC 17.14 17.14 17.14 17.14 17.14 17.14
Change in NWC 0.00 0.00 0.00 0.00 0.00
FCFF 1.14 0.78 -0.24 -1.78 -0.88 -22.25
WACC 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
EV Value 1.06 0.67 -0.19 -1.31 -0.60 -15.14
EV for the firm -15.52

Sensitivity Analysis d [d] CGS&SGA at 2002 level [as a % of sales] & Change in NWC at 2002 level
WACC 8.00% Cgs 68.54%
High Growth Rate 0.00% S&A 22.24%
Stable Growth Rate 0.00%

Valuation of Robertson 1 2 3 4 5 Terminal

Year 2002 2003 2004 2005 2006 2007 Value
Sales 55.30 58.60 62.10 65.90 69.80 69.80
Cost of Goods 37.90 40.16 42.56 45.17 47.84 47.84
Gross Profit 17.40 18.44 19.54 20.73 21.96 21.96
Selling & Admin 12.30 13.03 13.81 14.66 15.52 15.52
Depriciation 2.10 2.30 2.50 2.70 2.90 2.90
EBIT 3.00 3.10 3.23 3.38 3.54 3.54
Tax 40.00% 40.00% 40.00% 40.00% 40.00% 40.00%
EBIT ( 1-T) 1.80 1.86 1.94 2.03 2.12 2.12
Net Capex 1.70 1.00 0.90 0.90 0.00
NWC 17.14 18.17 19.25 20.43 21.64 21.64
Change in NWC 1.02 1.09 1.18 1.21 0.00
FCFF 1.44 2.35 2.65 2.91 5.02 36.40
WACC 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
EV Value 1.33 2.02 2.10 2.14 3.42 24.78
EV for the firm 35.78

Question 6
Equity Valuation
By EBITDA 28.98
By PE 28.99
h rate in st.phase at 4%
rate in st.phase at 4%

rate in st.phase at 0%
n NWC at 2002 level