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Sensitivity Analysis
What if book value of debt Increase b Decrease by 25% What if Beta increase/decrease by 25%
Last Sales 56576 56576 Last Sales 56576
Sales Growth 2% 2% Sales Growth 2%
Op. Profit Margin 39% 39% Op. Profit Margin 39%
Tax Rate 30% 30% Tax Rate 30%
Inc. Cap. Investment 69% 69% Inc. Cap. Investment 69%
Inc. W. Cap 32% 32% Inc. W. Cap 32%
Planning Horizon 5 Years 5 Years Planning Horizon 5 Years
Required Rate of Return 8.70% 8.70% Required Rate of Ret 10.22%
Mkt Securities and Cash 11122 11122 Mkt Securities and C 11122
Risk Free 2.48% 2.48% Risk Free 2.48%
Rm - Rf 5.60% 5.60% Rm - Rf 5.60%
Beta 1.16 1.16 Beta 1.45
Total Equity 202757 202757 Total Equity 202757
Book Value of Debt 16596.25 11285.45 Book Value of Debt 13277
Total Mve + Mvd 219353.3 214042.45 Total Mve + Mvd 216034
As Percentage As Percentage
Equity 92% 95% Equity 94%
Debt 8% 5% Debt 6%
Kd cost of debt 6.37% 6.37% Kd cost of debt 6.37%
und Annual Growth Rate (CAGR) = (ending amount/ beginning amount) ^ (1/N-1) -1
nancial assets + cash and cash equivalents - other financial liabilities - other financial liabilites
28 February 2011
/decrease by 25%
56576 Weighted Average Cost of Capital
2% Ke*E/(E+D)+Kd*(1-t)*D/(E+D)
39%
30%
69% Beta Increase b Decrease by 25%
32% WACC 10.22% 7.78%
5 Years Book valueIncrease b Decrease by 25%
7.78% WACC 8.63% 8.74%
11122
2.48%
5.60%
0.986
202757
13277
216034
94%
6%
6.37%
Net Asset Valuation
Year 2010 2009 2008 2007 2006
Net Asset 65274 45925 22461 26324 19385
No. Ordinary Shares 1960.6 1570.7 1570.1 1293 1349.6
Share Price 33.29 29.24 14.31 20.36 14.36
Formula:Dividends paid during the year/ (Rio Tinto plc previous year Final and Special (b) + Rio Tinto Limite
Growth
-0.19
Growth from 2008/10
CAPM
Ke= Rf+βe(Rm-Rf)
8.98%
Sensitivity Analysis
Beta
Increases by 25% Decreases by 25%
Ke= Rf+βe(Rm-Rf) Ke= Rf+βe(Rm-Rf)
10.60% 8%
rom annual report Notes to dividend
cial (b) + Rio Tinto Limited previous year Final and Special)
Weighted Average Cost of Capital
Ke*E/(E+D)+Kd*(1-t)*D/(E+D)
8.70%
Year 2010
Market Value Per Share 76.63
EPS 7.744568
P/E Ratio 9.89
Economic Profit
Profit before interest after tax - (Invested capital * WACC)
Equity 187271
ICI
Balance Sheet Extract 2010 2009 2008
Property, Plant and Equipment 56024 45803 41753
Intangible Asset 5700 5730 6285
Total 61724 51533 48038
Change 10191 3495
ICI 2010
0.690868
IWC
Balance Sheet Extract 2010 2009 2008
Trade and other receivables 7407 5822 6512
Inventories 4756 4889 5607
Subtract (Non current assets + current assets)
Trade and other payables 7455 6350 7649
Total 4708 4361 4470
Divide by change in sales 14751 -12439 (Non current assets + current assets)
IWC 0.319165
Sources:
Rio Tinto Annual Report 2010 http://www.riotinto.com/annualreport2010/performance/five_year_review.html
Rio Tinto Annual Report 2009 http://www.riotinto.com/annualreport2009/financial_statements/index.html
All About EVA http://www.investopedia.com/articles/fundamental/03/031203.asp
Total Invested Capital
Non-Current Assets Non-Current liabities
Goodwill 15296 Trade and other payables
Intangible assets 5700 Other financial liabilities
Property, plant and equipment 56024 Provision for post retirement ben
Investments in equity accounted units 6503 Other provisions
Loans to equity accounted units 227
Inventories 375
Trade and other receivables 1826
Deferred tax assets 1863
Tax recoverable 89
Other financial assets 1334
current assets)
current assets)
ce/five_year_review.html
_statements/index.html
031203.asp
879
416
4339
9023
6576
265
1117
7