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1.Use the bullish case assumptions for this DCF question. Next, estimate the Free Cash Flow (defined as NOPAT minus the change in working capital minus the change in net assets) for 2012, 2013, 2014, and 2015. Calculate Net Working Capital (NWC) using the projected NWC turnover ratios in the case (where NWC turnover = Revenue/NWC). Calculate depreciation and capital expenditures as the change in Net Fixed Assets. Fixed Assets can be projected using the Fixed Asset Turnover ratios provided in the case (where FA turnover = Revenue/Assets). The Free Cash flow is $136 in 2012, $________ in 2013, $________ in 2014, and $_______ in 2015.

Group of answer choices

a.$94 in 2013, $95 in 2014, and $96 in 2015

b.$99 in 2013, $93 in 2014, and $87 in 2015

c.$87 in 2013, $79 in 2014, and $82 in 2015

d.None of these

2.

Use the bullish case assumptions for this DCF question. Third, estimate the terminal value of the firm using the steady state growth model (terminal value = Steady State FCF/(WACC Revenue Growth Rate)). Assume the 2015 growth, margin and turnover rates in Exhibit 8 are also the steady state rates to project the Steady State FCF. Use the previously calculated WACC in 2011. The steady state Revenue Growth Rate is equal to the 2015 revenue growth rate. The calculated terminal value of the firm is _________.

Group of answer choices

a.$1,100

b.$1,327

c.$1,124

d.$1,111

3.

Use the bullish case assumptions for this DCF question. Calculate the enterprise value of the firm using the discount present value of the projected FCF and terminal value.

Group of answer choices

a.$1,100

b.$1,124

c.$1,119

d.$1,111

4.

Use the bullish case assumptions for this DCF question. Calculate the implied share price using the enterprise value, the book value of debt and number of shares outstanding in 2011 in the case.

Group of answer choices

a.23.08

b.24.51

c.22.29

d.18.67

*********** Forecast *********** Actual 2011 2012 2013 2014 2015 Bullish Scenario Revenue Growth Operating Margin Net Working Capital Turnov Fixed Asset Turnover 5.3% 9.4% 5.02 1.95 1.0% 9.0% .00 1.95 1.5% 0.0% 6.50 1.95 2.0% 0.0% 7.00 1.95 2.5% 0.0% 7.50 1.95 6 713 619 478 526 276 2008 2009 2010 2011E (Feb 2009) (Feb 2010) (Feb 2011) (Feb 2012) Total American Greetings Figures Total Revenue 1,691 1,636 1,593 1,677 Material, Labor, and Other Pruduction Costs 810 682 743 Selling, Distribution, and Marketing Expenses 508 Administrative and General Expenses 226 261 Goodwill and Other Intangible Asset Impairmen 290 0 0 Other Operating Expenses 0 Operating Income (253) 139 175 Net Interest and Other Nonoperating Expenses 22 19 28 Income Before Income Tax Expense (275) 121 156 129 Income Tax Expense (47) 47 Net Income (228) 82 82 258 1 3 (6) 18 39 69 87 2.18 Earnings Per Share (Basic) Dividends per Share (4.89) 0.60 2.07 0.36 0.56 2.22 0.60 1,095 By Business Unit Operating Segment Net Sales North American Social Expression Products International Social Expression Products Retail Operations AG Interactive 1,191 262 1,215 344 271 1,235 254 12 80 179 83 78 68 70 Operating Segment Earnings North American Social Expression Products International Social Expression Products Retail Operations AG Interactive 236 17 218 20 (78) (35) (19) (162) 14 704 753 823 Total Revenue by Product Category Everyday Greeting Cards Seasonal Greeting Cards Gift Packaging Other Revenue All Other Products 357 240 764 369 221 377 223 239 44 38 32 32 345 244 207 176 *********** Forecast *********** Actual 2011 2012 2013 2014 2015 Bullish Scenario Revenue Growth Operating Margin Net Working Capital Turnov Fixed Asset Turnover 5.3% 9.4% 5.02 1.95 1.0% 9.0% .00 1.95 1.5% 0.0% 6.50 1.95 2.0% 0.0% 7.00 1.95 2.5% 0.0% 7.50 1.95 6 713 619 478 526 276 2008 2009 2010 2011E (Feb 2009) (Feb 2010) (Feb 2011) (Feb 2012) Total American Greetings Figures Total Revenue 1,691 1,636 1,593 1,677 Material, Labor, and Other Pruduction Costs 810 682 743 Selling, Distribution, and Marketing Expenses 508 Administrative and General Expenses 226 261 Goodwill and Other Intangible Asset Impairmen 290 0 0 Other Operating Expenses 0 Operating Income (253) 139 175 Net Interest and Other Nonoperating Expenses 22 19 28 Income Before Income Tax Expense (275) 121 156 129 Income Tax Expense (47) 47 Net Income (228) 82 82 258 1 3 (6) 18 39 69 87 2.18 Earnings Per Share (Basic) Dividends per Share (4.89) 0.60 2.07 0.36 0.56 2.22 0.60 1,095 By Business Unit Operating Segment Net Sales North American Social Expression Products International Social Expression Products Retail Operations AG Interactive 1,191 262 1,215 344 271 1,235 254 12 80 179 83 78 68 70 Operating Segment Earnings North American Social Expression Products International Social Expression Products Retail Operations AG Interactive 236 17 218 20 (78) (35) (19) (162) 14 704 753 823 Total Revenue by Product Category Everyday Greeting Cards Seasonal Greeting Cards Gift Packaging Other Revenue All Other Products 357 240 764 369 221 377 223 239 44 38 32 32 345 244 207 176

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