Question

Year 2022 2018 2019 2020 2017 2021 Sales $5,381.00 $5,769.00 $ 6,184.00 $6,630.00 $7,107.00 EBIT 861 923 989 1061 1137 247 265 Tax at 23.3% 201 215 231 Earnings after tax Positive Depreciation Negative Capital Expenditures Negaive Increase in working capital 660 708 759 814 872 172 185 198 212 227 172 185 198 212 227 108 115 124 133 142 Free cash flow $ $ $ $ 553 593 635 681 730 748 PV at 7.3% of FCFS '17-'21 2,571 Terminal value estimates: Terminal value in 2021 Perpetual growth at 2.5% [FCF 22/(Kw-g)] Warranted MV firm/Sales in '21 equal 3.00 times 15,589 21321 Projected book value of det and equity in '21 5074 15,000 Best guess terminal value PV of terminal value 10,564 $ Estimated value of firm 13,117 Value of debt Value of equity Shares outstanding Estimated value per share 1,721 $ 11,396 124.5 million 91.54

1. Solve for the firms value as a whole.

2. Solve for the firm's stock value on a per share basis.

Answer 1

Time (n) 1 2 4 6 Formula 2019 2020 2021 Year 2017 2018 2022 Sales (S) 5769 7107 5381 6184 6630 861 EBIT 923 989 1061 1137 Tax @ 23.3% 201 215 230 247 265 708 660 872 ЕВT 759 814 Add: Depreciation 172 185 198 212 227 Less: Capex 172 227 185 198 212 Less: Increase in NWC 108 115 124 133 142 748 Free Cash Flow (FCF) 552 635 730 593 681 FCF6/(WACC-g) Horizon value (HV) Total FCF (CF) 15590 Year 5: FCF5+HV 552 593 635 681 16320 PV of CF Firm value (FV) 514 CF/(1+7.3%)An 515 515 514 11474 Sum of all PVs 13531 Less: Debt 1721 Add: Cash 0 Equity value Shares O/S FV-DebtCash 11810 125 Equity value/shares O/S Price per share ($) 94.86

You have the FCF for Year 6. So, you only need to calculate the horizon value and add it to the remaining FCFs. The present value of these FCFs will be the firm value. Also note that since only an Excel SS was given in the question and the numbers are rounded off not exact, the values will differ slightly from actual values.