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Conservative Approach
Estimation of Firm Value
(in FFr million)
Sales
Cost of Goods Sold
General Admin Expense
EBIT
Tax rate on EBIT
NOPLAT
Depreciation
Amortization
Increase in Working Capital
Capital Expenditure
Free Cash Flow
1989
337.4
(104.9)
(197.6)
34.9
37%
22.0
11.7
-
832.2
1,671.9
2,504.0
(37.0)
2,467.0
If Beta =
Cost of Equity =
WACC =
Firm value =
0.8
14.06%
13.22%
422.9
13.22%
1990
380.0
(114.4)
265.6
37%
167.3
19.0
3.3
(20.0)
169.7
1991
380.0
(125.1)
254.9
37%
160.6
20.0
3.3
183.9
1992
380.0
380.0
37%
239.4
3.3
242.7
1993
380.0
380.0
37%
239.4
239.4
1994
380.0
380.0
37%
239.4
239.4
2,746.8
4
145.7
0
169.7
1
162.4
2
189.4
3
165.0
0.9
14.56%
13.66%
401.2
1
15.06%
14.11%
381.5
1.1
15.56%
14.55%
363.6
1.2
16.06%
15.00%
347.1
Estimation of WACC
Rf
Rm
Beta
Cost(E)
Cost(D)
Eff. Tax%
Cost(D) net
Debt
Equity
Debt/Value
WACC
10.06%
5%
0.8
14.06%
10.00%
37.00%
6.30%
37
303
10.88%
13.22%
(*)
Page 1
Appendix 1
Conservative Approach
1995
380.0
380.0
37%
239.4
239.4
4.5%
-500
169.6706
183.8981
242.73
239.4
34%
5
vity analysis)
Page 2
239.4
Appendix 1
Conservative Approach
239.4
Page 3
Appendix 2
Baring's Approach
Estimation of Firm Value
(in FFr million)
Sales
Cost of Goods Sold
General Admin Expense
EBIT
Tax rate on EBIT
NOPLAT
Depreciation
Amortization
Increase in Working Capital
Capital Expenditure
Free Cash Flow
1989
337.4
(104.9)
(197.6)
34.9
0%
34.9
11.7
-
1990
380.0
(114.4)
265.6
0%
265.6
19.0
3.3
(20.0)
268.0
1991
419.9
(125.1)
294.8
0%
294.8
20.0
3.3
318.1
0.8
14.06%
13.22%
6,012.3
0.9
14.56%
14.56%
5,767.6
Rf
Rm
Beta
Cost(E)
Cost(D)
Eff. Tax%
Cost(D) net
Debt
Equity
Debt/Value
WACC
10.06%
5%
0.8
14.06%
10.00%
37.00%
6.30%
37
303
10.88%
13.22%
1992
464.0
464.0
0%
464.0
3.3
467.3
1993
510.4
510.4
0%
510.4
510.4
1994
561.4
561.4
0%
561.4
561.4
1995
561.4
561.4
0%
561.4
561.4
-7.7%
5
1.4
17.06%
17.06%
5,347.8
1
318.1
2
467.3
3
510.4
7,298.6
4
561.4
1
15.06%
15.06%
5,680.1
1.1
15.56%
15.56%
5,594.4
1.2
16.06%
16.06%
5,510.5
1.3
16.56%
16.56%
5,428.3
Estimation of WACC
Long term Gov. bond
(the range of 0.8 - 1.2 would be used as sensitivity analysis)
Assume AA grade for now
(*)
Page 4
Appendix 2
Baring's Approach
Page 5