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In the DCF analysis in class (Topic 7.5 7.6), what is the enterprise value of...

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Finance

In the DCF analysis in class (Topic 7.5 7.6), what is the enterprise value of ValueCo if the cost of goods sold is 55%and EBITDA margin is 26%of sales in years 2013 2015, keeping all other assumptions identical?image

Operating Scenario Base CAGR ('09-'11) 10.9% CAGR (12.17 5.1% 2013 $3,708.8 7.5% 2.2253 $1,483.5 40.0% 13.8% 5.1% EXHIBIT 3.57 ValueCo DCF Analysis Output Page ValueCo Corporation Discounted Cash Flow Analysis ($ in millions, fiscal year ending December 31) Operating Scenario Mid-Year Convention Historical Period 2009 2010 Sales $2,600.0 $2,900.0 % growth NA 11.5% Cost of Goods Sold 1.612.0 1,769.0 Gross Profit $988.0 $1,131.0 % margin 38.0% 39.0% Selling, General & Administrative 496.6 551.0 EBITDA $491.4 $580.0 18.9% 20.0% Depreciation & Amortization 155.0 165.0 EBIT $336.4 $415.0 % margin 12.9% 14.3% Taxes 127.8 157.7 EBIAT $208.6 S257.3 Plus: Depreciation & Amortization 155.0 165.0 Less: Capital Expenditures (114.4) (116.0) Less: Inc./(Dec.) in Net Working Capital Unlevered Free Cash Flow WACC 10.0% Discount Period Discount Factor Present Value of Free Cash Flow 704.1 16.9% 5.1% % margin 2011 $3,200.0 10.3% 1,920.0 $1,280.0 40.0% 608.0 S672.0 21.0% 193.0 S479.0 15.0% 182.0 $297.0 193.0 (144.0) 2012 $3,450.0 7.8% 2070.0 $1,380.0 40.0% 655.0 $725.0 21.0% 207.0 $518.0 15.0% 196.8 $321.2 207.0 (155.3) Projection Period 2014 2015 $3,931.3 $4,127.8 6.0% 5.0% 2.358.8 2.476.7 $1,572.5 $1,651.1 40.0% 40.0% 746.4 783.7 $826.1 5867.4 21.0% 21.0% 235.9 247.7 $590.3 S619.8 15.0% 15.0% 224.3 235.5 $366.0 $384.3 235.9 247.7 (176.9) (185.8) (41.0) (362) $384.0 2016 $4,293.0 4.0% 2.575.8 $1,717.2 40.0% 815.0 $902.1 21.0% 257.6 $644.6 15.0% 244.9 $399.6 257.6 (193.2) (30.4) $433.6 $779.4 21.0% 222.5 $556.9 15.0% 211.6 $345.2 222.5 (166.9) (476) $353.3 2017 $4,421.7 3.0% 2.653.0 $1,768.7 40.0% 839.5 $929.2 21.0% 265.3 $663.9 15.0% 252.3 $411.6 265.3 (1990) (23.7) $454.2 19.3% 5.1% 19.3% 5.1% $410.0 0.5 0.95 1.5 0.87 3328 2.5 0.79 $323.1 3.5 0.72 $310.6 4.5 0.65 $295.8 $336.8 Enterprise Value Cumulative Present Value of FCF $1,599.2 - $5.926.4 1,500.0) Implied Equity Value and Share Price Enterprise Value Less: Total Debt Less: Preferred Stock Less: Noncontrolling Interest Plus: Cash and Cash Equivalents Implied Perpetuity Growth Rate Terminal Year Free Cash Flow (2017) WACC Terminal Value $454.2 10.0% $6,969.0 250.0 Implied Perpetuity Growth Rate 3.041 Terminal Value Terminal Year EBITDA (2017) Exit Multiple Terminal Value Discount Factor Present Value of Terminal Value % of Enterprise Value $929.2 7.5% $6,969.0 0.62 $4,327.2 73.0% Implied Equity Value $4,676.4 Implied EV/EBITDA Enterprise Value LTM 9/30/2012 EBITDA $5,926.4 700.0 Enterprise Value $5,926.4 Implied EV/EBITDA 8.5% 6.5x 9.0% 9.5% 10.0% 10.5% 11.0% Enterprise Value Exit Multiple 7.0x 7.5x 5.863 6,165 5,749 6,044 5,638 $5,926 5,530 5,812 5.425 5.700 5,561 5,454 5,349 5,248 5.149 WACC 8.Ox 6,467 6,339 6.215 6,094 5.976 8.5x 6.769 6.634 6,503 6,376 6.252 Implied Perpetuity Growth Rate Exit Multiple 7.0x 7.5x 1.6% 2.1% 2.0% 2.5% 2.5% 3.0% 2.9% 3.4% 3.9% 9.0% 9.5% 10.0% 10.5% 11.0% WACC 6.5x 1.1% 1.5% 2.0% 2.4% 2.9% 8.Ox 2.5% 2.9% 3.4% 3.8% 4.3% 8.5x 2.8% 3.3% 3.7% 4.2% 4.7% 3.4%

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