Вы находитесь на странице: 1из 27

WAL-MART BUSINESS VALUATION

SEPTEMBER 2011

Table of Contents WAL-MART BUSINESS VALUATION..............................................................................1 Table of Contents....................................................................................................... 1 1.Introduction............................................................................................................. 1 Forecasting the financial statements..........................................................................2 Computation of beta, cost of equity, cost of debt and weighted Average Cost of Capital (WACC)...........................................................................................................3 Beta estimation....................................................................................................... 3 Cost of equity (required rate of return)...................................................................3 Cost of debt.............................................................................................................3 WACC......................................................................................................................4 Common business valuation methods........................................................................4 Discounted cash flows method................................................................................4 1.3.Dividend growth (Gordon model) .....................................................................7 1.4.EPS model (Market Multiple analysis)................................................................8 1.5.Earning model...................................................................................................8 Book value method..................................................................................................9 Risk Management Committee ................................................................................9 RISK FACTORS.......................................................................................................... 10 RISK MEASURES........................................................................................................11 Sensitivity Analysis................................................................................................12 Scenario Analysis..................................................................................................12 Monte Carlo Simulation.........................................................................................12 2.EXHIBITS................................................................................................................ 16 REFERENCE............................................................................................................... 27

1. Introduction The stakeholders and potential investors of the company need to know the value of company for different purposes including mergers and acquisitions, sale of securities, tax assessment, wills and estates, divorce settlements, business analysis, and basic bookkeeping and accounting. It is important to note that the value of the companies fluctuates over time. Thus, valuations are required in order for investors invest in a certain stock as of a specific date e.g., the end of the accounting quarter or year. (http://en.wikipedia.org/wiki/Valuation (finance), viewed on July 17, 2011) The basis for valuing a company is the financial statements. The financial statements are prepared based either on GAAP or IFRS. The financial statement of the public companies are audited by auditors and also overseen by the concerned government office. Thus, the financial information contained in the financial statements is more credible than those for the private company. The value of the company and expected return has an impact on the price of the share of a company. The return is directly associated with the risk and has positive correlation. There are various methods of valuation of a company. In this paper, we have undertaken valuation of Wal-Mart Inc. These are discussed in the following sections. Executive Summary

Wal-Mart Inc. has been in the business of merchandise sales for more than half a century. It has been performing well through these time and is getting even bigger through expansion. In order to determine the value of its shares, the group has utilized the known valuation methods like discounted cash flow
method, dividend growth (Gordon model) and Market Multiple analysis (EPS model), Earning method and

Book value methods. We also have calculated the beta (risk) of the company by employing a regression analysis. The companys potential risks have been identified which include: general economic factors, both
domestically and internationally, may adversely affect financial performance; impediment to expansion in the United States, including conversions of discount stores into supercenters and opening other store formats; strong competition from other retailers and wholesale club operators; risks associated with the suppliers and the safety of those products could adversely affect its financial performance; and others. The following are the main points identified in this valuation paper.

Wal-Marts share price as at July 15,2011 was $53.63 while the share value based on DCF was $51.41 and Gordon model was $58.42

Average sales growth of Wal-Marts was 7.01%, The required rate of return was determined as 5%, this has been used in determination value of stock The weighted average cost of capital was computed as 4%
Page 1 of 26

Growth in earnings from 2008 to 2017 in average is 7%.

Strategic Fundamental Analysis of Wal-Mart Inc. Wal-Mart is established in 1962 and by now, it operates 8,000 stores across three business segments of retail stores worldwide that offer a wide array of general merchandise including groceries, apparel, electronics, and small appliances. In addition, the company is the world's largest retailer and grocery chain by sales and just over half of the company's sales comes from grocery items. Over half of the company's stores are located in the United States, with the majority of international stores located in Central and South America and China. (http://www.wikinvest.com/stock/Wal-Mart_(WMT)#Company_Overview) Wal-Mart is one of the biggest discount market in the US, and it is listed in the New York Stock Exchange (NYSE) with code WMT. The companys total sales were growing from $308,945 mill. in 2006 to $405,046 mill. in 2010 but at a decreasing rate. The dividend was increasing from $0.60 to $1.09 in the respective periods. Forecasting the financial statements According to Ehrhardt and Brigham (2009,p.477), continuation of past sales growth should consider national, global economies, the firms and its competitors new products, planned advertising program and soon. Ehrhardt and Brigham (2009) stated the two methods of forecasting as follows: 1.1. Additional funds needed (AFN) method Expected growth in sales will bring growth in assets, liabilities, addition to retained earnings. The computation of AFN is determined by adding all required new assets and then subtracts both spontaneous funds and addition to retained earnings. The problem with the method is the assumption that the key ratio remains constant to their base year levels. 1.2. Forecasting the financial statements method This method involves the following steps: a) Forecast the operating items: sales, operating expenses, operating assets, spontaneous liabilities; b) Forecast items that depend on the firms choice of financial policies; c) Forecast interest expenses and preferred dividends; d) Use the forecasted interest expenses and preferred dividends to complete the income statements; e) Determine the total common dividend payments; f) Issue or repurchase stock. In forecasting the financial statements of Wal-Mart Inc., we used the following guideline; a) Sales: we consider the sales from 2006 through 2010 and the compounded growth of sales is 7.01% as shown below (the amounts are in millions): Page 2 of 26

$308,945*(1+r)4=$405,046; r = 7.01% When we consider the average for 2006 through 2010, the percentage growth becomes 7.08% as shown below: 2006 $308,94 5 2007 2008 2009 2010 Average

$344,759 $373,821 $401,087 $405,046 12% 8% 7% 1% 7.08% Thus, we determine to use compound growth rate which appears to be more realistic. b) The growth in operating costs, operating assets, operating spontaneous liabilities is related to sales and the assumption is the relation of these items to sales in 2010 will hold for the next seven years. c) Depreciation and amortization are related to the fixed percentage of the net plant, equipment and property under capital leases; d) Long term loan, Preferred stock and Common equity: the percentage of total investor supplied capital is the basis to forecast the financial statement for the next seven years. Based on the above discussion, the forecasted balance sheet and income statements for seven years are shown in exhibit # 1. Computation of beta, cost of equity, cost of debt and weighted Average Cost of Capital (WACC) Beta estimation We consider data of 60 months for Wal-mart and S&P 500 to estimate beta. Based on the regression analysis, the calculated beta is 0.353; which is lower than 1 i.e. below the markets beta. The working is shown under exhibit #2. Cost of equity (required rate of return) We used the capital asset pricing model in estimating the cost of equity. The model involves risk free rate of return, beta (section 3.1 above), and the risk premium. We used 10 year US coupon of 3.125% ruling on July 15, 2011 for risk free rate of return. (http://www.bloomberg.com/markets/) The risk premium, which is the difference between the market rate of return and risk free rate of return, is also adopted from the internet that it is 0.055. Thus, the cost of equity will be: 3.125%+0.353*0.055= 5% Cost of debt The cost of debt is the rate at which the holders earn interest. Based on the historical data, the average cost of debt was 5.21% as shown below (the values are in millions): 2008 Long-term debt Long-term obligations under capital leases 2009 37,197 3,515 40,712 2010 37,281 3,516 40,797 Average

Interest: Page 3 of 26

Debt Capital leases

1,896 288 2,184 5.36%

1,787 278 2,065 5.06% 5.21%

Interest rate

However, the corporate bond yield as quoted at www.finance.yahoo.com as of July 15, 2011 was 5.022%. We used the latter rate for our analysis as it appears to be more realistic. The net of tax rate for the cost of debt will be 3.36% ((5.022*(1-33%)). WACC Computation of WACC involves the cost of equity, cost of preference shares and cost of debt. In the case of WalMart, there was no preference share and thus, we only consider cost of debt and cost of equity for the computation of WACC. In addition, capital structure and taxes are also important variables to be considered in the computation. The capital structure is 57% of debt and 43% of equity. Effective tax rate is 33%. (source to be included) Thus, the computation of WACC is as shown below: WACC= rf +(rm), where rf is the risk free rate; is beta; rm is risk premium WACC= (4%*0.57)+(5%*0.43)=4% Common business valuation methods Discounted cash flows method This method estimates the value of a company based on the future cash flows estimated to be generated from operation and are discounted at the WACC to the present. According to Berkus (2002), this method is important when the buyer intends to finance the purchase using the revenue from the purchased company itself. The following assumptions govern the application of this valuation method. As postedd on Gale Encyclopedia of Small Business: Discounted Cash Flow, Ronald W. Hilton, author of Managerial Accounting, described that there are two primary methods of discounted cash flow analysis: Netpresent-value method (NPV) and internal-rate-of-return (IRR) method. Principal assumptions of these methods are as follows:

All cash flows are treated as though they occur at the end of the year. DCF methods treat cash flows associated with investment projects as though they were known with certainty, whereas risk adjustments can be made in an NPV analysis to account in part for cash flow uncertainties.

Both methods assume that all cash inflows are reinvested in other projects that earn monies for the company. DCF analysis assumes a perfect capital market. ( http://www.answers.com/topic/discounted-cash-flow viewed on 27 July 2011). Page 4 of 26

Page 5 of 26

EBIT TAX RATE NOPAT Operating current assets Operating current liabilities Net operating working capital Net fixed assets Operating capital Net investment in capital Free Cash Flow Discounting factor at WACC OF 4% 2017 FCF will continue in perpetuity Discounted FCF 2010-2017 Value of operating assets Value of nonoperating assets Number of shares value per share

2009 22,729.00 0.33 15,228.43

2010 23,539.00 0.33 15,771.13

2011 24,605.77 0.33 16,485.87

2012 26,330.64 0.33 17,641.53

2013 28,176.41 0.33 18,878.19

2014 30,151.57 0.33 20,201.56

2015 32,265.21 0.33 21,617.69

2016 34,527.00 0.33 23,133.09

2017 36,947.34 0.33 24,754.72

48,949.00 48,550.00 399.00 95,653.00 96,052.00

48,331.00 49,800.00 (1,469.00) 102,307.00 100,838.00 4,786.00 10,985.13 1.00

51,719.00 52,271.98 (552.98) 104,571.74 104,018.76 3,180.76 13,305.11 0.96

55,344.51 55,062.68 281.83 106,995.25 107,277.08 3,258.32 14,383.21 0.92

59,224.15 60,061.25 (837.10) 109,588.65 108,751.55 1,474.47 17,403.72 0.89

83,370.77 65,302.04 18,068.73 112,363.84 130,432.57 21,681.02 (1,479.46) 0.85

102,868.41 69,879.72 32,988.69 115,333.55 148,322.24 17,889.67 3,728.02 0.82

114,209.25 69,440.28 44,768.97 118,511.46 163,280.43 14,958.19 8,174.90 0.79

125,329.81 60,486.25 64,843.56 121,912.14 186,755.70 23,475.27 1,279.45 0.76 33,265.66 33,265.66 87,060.12 120,325.78 74,306.00 194,631.78 3,786.00 51.41 Page 6 of 26

10,985.13 10,985.13

12,793.37 12,793.37

13,298.08 13,298.08

15,471.85 15,471.85

(1,264.65) (1,264.65)

3,064.16 3,064.16

6,460.74 6,460.74

26,251.44 59,517.10

1.3.Dividend growth (Gordon model)


This method estimates the value of the company based on the future of stream of dividend to be paid out to the shareholders for indefinite period of time. Based on the available information, dividend could increase every year at different rate and could also be assumed to increase at a constant rate after a certain period. The future cash flow is then discounted at required rate of return. . It is believed that the discounted dividend method is more precise than other methods as it is based on expected cash flows. Assumptions employed by the Gordon valuation model: Gordon Model is believed to be appropriate for mature companies with stable history of growth. As discussed in the foregoing paragraph, Wal-Mart was established in 1962 and getting strong since then and it has relatively a constant growth history and has been in business for so long with successful history and this can justify that it could be classified as the mature companies. Growth in dividend occurs as a result of growth in earning per share, Dividend is expected to grow for forever at constant rate, which is 2% in our case Dividend paid (exhibit 6) Discounting factor at required rate of return of 5% (Section 3.1) Present value of dividend 20102017 Present value of dividend commencing 2018 in perpetuity (growth expected at 2%) Total value of the company Number of shares Value per share 2010 4,217.00 1.00 4,217.00 2011 4,464.94 0.95 4,252.32 2012 4,934.96 0.91 4,476.15 2013 5,411.67 0.86 4,674.81 2014 5,780.92 0.82 4,755.98 2015 6,165.40 0.78 4,830.76 2016 6,782.51 0.75 5,061.22 2017 7,240.81 0.71 5,145.91 183,760.36 37,414.14 183,760.36 221,174.50 3,786.00 58.42

Page 7 of 26

1.4. EPS model (Market Multiple analysis) The Price/Earnings ratio computes stocks value by dividing price per share by earning per share. This method indicates how much investor is willing to pay per dollar of the profit 2010 High 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Probability Average price Price per share Basic earnings per share Current year earning Value per share in cents Number of shares value per share 1.5. Earning model 54.57 51.75 52.56 55.20 53.52 0.50 50.74 50.74 3.71 14,882.94 203,552.28 3,786.00 53.76 Low 46.25 47.35 48.73 49.52 47.96 0.50 High 59.04 59.95 63.85 59.23 60.52 0.50 54.91 2009 Low 47.84 55.05 47.40 46.92 49.30 0.50

Earnings are net incomes available for common shareholders. Earnings are important to investors because they give an indication of the company's expected future dividends and its potential for growth and capital appreciation. Earning for Wal-Mart Inc. is calculated as follows in order to determine the value of the stock of the company using the below model. (http://www.investorwords.com/1618/earnings.html)
VCS r RE 1 1 EPS 1 NPV 1 EPS 1 k = + = + k k g k k g

Earning in 2011 WACC (as above) Retained earning (as above) Return on equity Growth in earning (2008-2017) Value of the company Current earnings as a perpetuity with 100% payout Growth in earnings Total value of the company Number of shares

14,882.94 0.04 10,402.58 0.05 0.07

372,073.49 (77,263.20) 294,810.28 3,786.00 Page 8 of 26

Value per share Book value method

77.87

The book value of a companys stock is simply the stockholders' equity per common share of stock, which is equal to the net asset value, which is equal to total assets minus intangible assets, such as goodwill, minus total liabilities minus equity related prior claims, which includes preferred stock and cumulative dividends in arrears, divided by the number of outstanding common shares. (http://thismatter.com/money/stocks/valuation/book-liquidation-value-q-ratio.htm viewed on 28 July 2011.) Net Asset Value for Common Stock = Total Assets - Intangible Assets - Total Liabilities - Equity with Prior Claims = Stockholders' Equity Accordingly, the book value per share of Wal-Mart Inc. is shown in the table below.

Stock holders equity Number of shares Value per share Risk Management Committee

$72,999.00 3786 $19.28

Wal-Mart created a five-step process designed around four basic questions: What are the risks? What are we going to do about these risks? How will we measure whether we are having a positive or negative impact on the risks? How will we demonstrate shareholder value? The (http://www.rmmag.com/Magazine/PrintTemplate.cfm?AID=2209, viewed July 17, 2011). five step processes are discussed below: Step One Risk Identification. In this step, a risk map evaluates risks on an XY-axis, with the Xaxis representing probability and the Y-axis representing impact. This helps to prioritize what are seen as Wal-Marts biggest risks. Step Two Risk Mitigation. This step involves another facilitated workshop, where the three to five most important risks are further defined. Step Three: Action Planning. In this phase, the project teams meet and create simple project plans that identify who will do what by when. The teams then spend several months implementing their project plans. Step Four: Performance Metrics. Step Five: Shareholder Value/Return on Investment. In order to make sure that the action plans and results end up increasing shareholder value and return on investment, the main goal of this step is to Page 9 of 26

evaluate whether or not the project was able to increase sales or lower expenses. RISK FACTORS The risks described below could materially and adversely affect the business, results of operations, financial condition and liquidity of the company. These risks are not the only risks that the company faces. According to the filing of 10-k, some of the risk factors are the following: (http://www.wikinvest.com/stock/Wal-Mart_(WMT)/Filing/10-K/2010/F1938644) 1.6. General economic factors, both domestically and internationally, may adversely affect financial performance: The overall economic slowdown results in the decreases in consumer disposable income which could adversely affect consumer demand for the products and services. 1.7. Impediment to expansion in the United States, including conversions of discount stores into supercenters and opening other store formats Failure to execute retail concepts Local land use and other regulations restricting the construction of buildings; Increased real estate, construction and development costs could limit its growth opportunities and its ability to convert its discount stores into supercenters. If consumers in the markets into which it expands are not receptive to its retail concepts. 1.8. Failure to attract and retain qualified associates, changes in laws and other labor issues could adversely affect its financial performance. If unable to locate or attract or to retain qualified personnel, If the costs of labor or related costs increase significantly or if new or revised labor laws, rules or regulations are adopted, the financial performance could be affected adversely. 1.9. Strong competition from other retailers and wholesale club operators Risks associated with the suppliers and the safety of those products could

1.10.

adversely affect its financial performance. The challenge of finding qualified suppliers Political and economic instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers failure to meet the supplier standards, labor problems experienced by their suppliers, the availability of raw materials to suppliers, merchandise quality issues, Page 10 of 26

currency exchange rates, transport availability and cost, transport security, inflation, and other factors relating to the suppliers and the countries in which they are located are beyond their control.

the United States foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries

1.11.

Natural disasters and geo-political events could adversely affect their financial

performance. The occurrence of one or more natural disasters, such as hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes, tsunamis, weather conditions such as major or extended winter storms, droughts and tornados, whether as a result of climate change or otherwise, severe changes in climate and geo-political events, such as civil unrest or terrorist attacks in a country in which they operate or in which their suppliers are located could adversely affect the operations and financial performance. 1.12. Legal proceedings that may adversely affect the results of operations, financial condition and liquidity. They are involved in a number of legal proceedings, which include consumer, employment, tort and other litigation. Certain of these lawsuits, if decided adversely to them or settled by Wal-Mart, may result in liability material to its results of operations, financial condition and liquidity. 1.13. If it does not maintain the security of customer-related information, it could damage its reputation with customers, incur substantial additional costs and become subject to litigation.

1.14.

It relies extensively on computer systems to process transactions, summarize

results and manage our business. Disruptions in both its primary and secondary (back-up) systems could harm its ability to run the business.

1.15.

It may not timely identify or effectively respond to consumer trends, which

could negatively affect its relationship with its customers, the demand for its products and services, and its market share. RISK MEASURES According to Ehrhardt and Brigham (2010) risk is defined as the chance that some unfavorable events will occur. The following are approaches to consider the effect of the occurrence of the unfavorable events in our decision process: Page 11 of 26

Sensitivity Analysis It is a what if analysis that enables the reviewer of a model to determine which parameters are the key drivers/inputs to a models result. Sensitivity analysis measures the percentage change in NPV that results from a given percentage in an input variable when other inputs are held constant. (Ehrhardt & Brigham, p.436) For the purpose of this analysis, we need to show how the value of the company changes with changes in the growth of sales and earnings. Scenario Analysis In scenario analysis we will try to know what would happen to the projects NPV if several of the inputs turn out to be better or worse than expected. Scenario analysis allows us to assign probabilities to the base (or most likely) case, the best case, and the worst case; then we can find the expected value of the projects NPV, along with its standard deviation and coefficient of variation, to get a better idea of the projects risk. (Ehrhardt & Brigham, p.439) This method brings in the probabilities changes in the key variables, and it allows us to change more than one variable at a time. Monte Carlo Simulation It ties together sensitivities, probability distributions, and correlations among the input variables. It is a problem solving technique used to approximate the probability of certain outcomes by running multiple trial runs, called simulations, using random variables. In a simulation analysis, a probability distribution is assigned to each input. We have performed the same type of simulation for Wal-Mart Inc. in order to determine the risk of its stock. In the case of Wal-Mart, we forecast financial statements for the forthcoming seven years. Estimating the growth rate of sales is central for the rest of balance sheet and income statements accounts with the exception of depreciation, interest expenses and taxes. In the previous discussion, the compounded growth rate of sales was 7.01% but as future is full of uncertainty, there would be a chance that the sales grows at a percentage other than discussed above. Thus, we consider two more options i.e. growth at 6.25% (based on five years sales data (http://www.advfn.com/p.php?pid=financials&symbol=NYSE%3AWMT viewed on July 10,2011)and 7.08%(average growth of years from 2006 through 2010). We further considered that the probability that sales grows at 6.25%, 7.01% and 7.08% are 50%, 40% and 10% respectively. The free cash flow calculated based on the above growth varies and accordingly, the value of the company is shown as follows: Page 12 of 26

Value of operating assets Value of non-operating assets Number of shares value per share See Exhibit 7 the above value of $57.11. The risk is $55,982.62 and Coefficient of Variation (CV) is .39 which showed as the relationship between free cash flow and the value of the company is below average.

$141,832 74,398.00 216,230.26 $3,786 $57.11

The value per share, without considering different alternatives for sales, was $51.41 as compared to

Similarly, if we consider different growth rate in earning for 2011 to 2017 and again different growth rate in perpetuity, the value of the company will vary. Assume the following: Growth in earning 2011-2017 9% 7% (base-compounded rate) 5% probability 45% 30% 25% 2018 in perpetuity 6% 4% 3% 6% 4% 3% 2% probability 35% 45% 20% 35% 45% 20%

The total value and value per share based on the above scenario is as shown below Total value Number of shares value per share 233,617.89 3,786.00 73.28

The risk is $192,709.8 and Coefficient of Variation (CV) is 0 .82 which showed as there is strong relationship between earning and value of the company. After having the possible chance of growth in sales, we assigned the following probability to each event; Five years growth Five years compounded growth Five years average growth Growth in sales 5.28% 7.01% 7.08% Probability 45% 35% 20% 2.38% 2.45% 1.42% 6.25%

Page 13 of 26

A decrease in the growth of sales to 6.25% results a slight decreases in the intrinsic value of the company as shown below: Intrinsic value at Growth rate of Intrinsic 7.01% in sales FCF DDM EARNING MODEL P/E model Book value methods 33.83 58.42 77.87 53.76 19.28 sales 38.36 55.98 73.28 53.35 19.28 value at

Growth rate of 6.25% in

The risk and return on equity at different growth rate of sales is as shown below Growth in sales Required rate of return ( as above) Average return on equity of 8 years (2009-2017) Standard deviation 6.25% 5% 16.68% 0.947 7.01% 5% 16.90% 0.964

When the return on equity is greater than the required rate of return, the demand for the price of the stock will increase. According to Ehrhardt and Brigham (2010, p. ), the investors action therefore tend to drive the expected return toward the required return. When the rate of return on equity increases, the risk will also increase and the price of the stock will be pushed upward until the market equilibrium brings the stock price and intrinsic value of the stock on the same point. CONCLUSION The group has undertaken the stock valuation of Wal-Mart Inc. as discussed in the previous parts. The valuation is done for almost all the known valuation methods. This was done because we believe that performing the valuation with all the available methods will reduce the fear of the investor to decide to buy, sell or to do nothing with the stock under discussion. However, among the popular methods of valuation, discounted cash flow method, dividend growth (Gordon model) and Market Multiple analysis (EPS model), are the ones. Hence, even if we performed valuations using various models, we used the aforementioned methods to compare the stock price of Wal-Mart on NYSE and with the result of the valuation. Page 14 of 26

Accordingly, based on the discounted cash flow method value per share is $51.41 and the closing stock price on the NYSE was $53.63 as of July 15, 2011 which shows that the stock price was overvalued by $2.22. Based on the Gorden model (dividend growth model), the value per share is $58.42 and the closing stock price on the NYSE was $53.63 as of July 15, 2011 which shows that the stock price was undervalued by $4.79 and investors will purchase the stock to get the advantage. Based on the Market Multiple analysis (EPS model), the value per share is $53.76 and the closing stock price on the NYSE was $53.63 as of July 15, 2011 which shows that the stock price was undervalued by $0.13. From the above points, we can see that the different valuation methods can produce different results and hence for the marginal investor, it would be better off to calculate the average of the valuations results and compare that with the stock price. With this understanding, the average value per share for the mentioned three methods will be $54.53 and for the marginal investor, since the beta coefficient as calculated earlier is 0.353 which is below the market beta of 1.0, Wal-Marts stock is less riskier and hence the investor will buy the stock.

Page 15 of 26

2. EXHIBITS Exhibit 1: income statement

(Amounts in millions except per share data) Revenues: N et sales Membership and other income C osts and expenses: C ost of sales Depreciation and amortization O perating, selling, general and administrative expenses except depr O perating income Interest: Debt C apital leases Interest income Interest, net Income from continuing operations before income taxes Provision for income taxes: C urrent Deferred Income from continuing operations Income (loss) from discontinued operations, net of tax C onsolidated net income Less consolidated net income attributable to noncontrolling interest C onsolidated net income attributable to Walmart Retained earnings

2008

AC TUAL 2009

2010

2011

2012

2013

FO RECAST 2014

2015

2016

2017

$373,821 $401,087 3,202 3,287 377,023 404,374 284,137 6,317 64,617 21,952 1,863 240 -309 1,794 20,158 6,897 -8 6,889 13,269 -132 13,137 -406 12,731 304,056 6,739 70,781 22,798 1,896 288 -284 1,900 20,898 6,564 581 7,145 13,753 146 13,899 -499 13,400

$405,046 433,439.72 463,823.85 496,337.90 531,131.19 568,363.48 608,205.76 650,840.99 3,168 3,551.63 3,800.60 4,067.02 4,352.12 4,657.20 4,983.67 5,333.03 408,214 436,991.35 467,624.45 500,404.92 535,483.31 573,020.69 613,189.44 656,174.01 304,657 328,015.97 351,009.89 375,615.68 401,946.34 430,122.78 460,274.39 492,539.62 7,157 7795.8 8342.28 8927.08 9552.87 10222.52 10939.12 11705.95 72,450 76,313.85 81,663.45 87,388.06 93,513.96 100,069.29 107,084.15 114,590.75 23,950 24,865.73 26,608.83 28,474.10 30,470.13 32,606.10 34,891.78 37,337.70 1,787 278 -181 1,987.29 301.39 (286.29) 1,350.39 322.52 (306.36) 802.29 345.13 (327.84) 907.73 369.32 (350.82) 1,073.94 395.21 (375.41) 235.83 422.92 (401.73) 339.10 452.56 (429.89) 361.77 36,975.93 11,980.20 39.67 12,019.87 24,956.06 (39.95) 24,916.11 (780.30) 24,135.81 16,869.97

1,884 2,002.40 1,366.55 819.58 926.24 1,093.75 257.02 22,066 22,863.34 25,242.28 27,654.52 29,543.90 31,512.35 34,634.76 7,643 7,407.72 8,178.50 8,960.06 9,572.22 -504 26.42 28.27 30.25 32.37 7,139 7,434.14 8,206.77 8,990.32 9,604.60 14,927 15,429.20 17,035.51 18,664.20 19,939.30 -79 (26.60) (28.47) (30.47) (32.60) 14,848 15,402.59 17,007.04 18,633.73 19,906.70 10,210.00 34.64 10,244.65 21,267.71 (34.89) 21,232.82 11,221.66 37.07 11,258.73 23,376.03 (37.33) 23,338.70

-513 (519.65) (556.08) (595.06) (636.78) (681.42) (729.18) 14,335 14,882.94 16,450.96 18,038.67 19,269.92 20,551.40 22,609.51 10,402.58 11,498.57 12,608.32 13,468.91 14,364.62 15,803.15

Exhibit 2: Balance sheet Page 16 of 29

A o n i mlo s e ce p sh re m u ts n i i n x pt er a l d ata 20 09 2 10 0 21 01 21 02 21 03 2 14 0 AS T SES C rren a ts: u t sse C shan cashe uv en a d q i al ts $ ,2 5 7 7 $ ,9 7 7 0 8 1 8 46 .2 9 5 .4 04 2 9 89 6 .13 333 4 0 6 .3 R ei abe n t ec v l s, e 3 0 ,9 5 4,1 4 4 4 4 9 43 .4 4 4 .3 75 5 57 08 5 3 7 43 .9 In e to es v n ri 3 ,5 1 4 1 3 60 3,1 344 2 5 8 .5 3 9 .98 7 71 463 2 0 3 .8 442 5 3 8 .2 P p d e p ses an o er re ai x en d th 3 6 ,0 3 2,9 0 8 3 8 18 .9 3 1 .4 42 4 3 51 6 .65 3 7 3 90 .6 C rren a ts o dsc ti u o e ti n u t sse f i on n ed p ra o s 15 9 10 4 1 .81 49 10 2 6 .3 11 5 7 .5 18 .5 3 8 T tal cu n asse o rre t ts 4 ,9 9 8 4 4 31 8,3 57 1 19 5 3 .51 5 44 524 5 9 2 .1 830 7 3 7 .7 P p an eq i m t:L n ro erty d up en a d 1 ,8 2 9 5 2 91 2,5 214 3 4 7 .6 2 8 .27 5 69 262 1 7 8 .7 263 6 9 2 .2 B idn s an i p v en ul i g d m ro em ts 7 ,8 0 3 1 7 52 7,4 881 9 2 8 .3 8 6 .37 8 91 998 4 4 0 .6 1 15 1 3 0 6 .7 Fx res an eq i m t i tu d up en 2 ,8 1 9 5 3 50 5,4 395 5 7 3 .0 4 5 .29 0 94 449 5 3 3 .9 445 9 6 8 .0 T n o ti ne up en ra sp rta o q i m t 2 0 ,3 7 2,3 5 5 2 0 9 52 .0 2 9 .7 66 4 2 85 8 .79 3 8 8 08 .0 P p an eq i m t ro erty d up en 15 2 2 ,8 0 17 4 3 ,8 8 17 1 4 4 51 .1 1 7 5 .6 581 8 18 7 8 6 91 .0 1 07 8 7 8 5 .1 L a u uated d p cati n ess cc ml e re i o -3 ,9 4 2 6 -3 04 8,3 -4 7 1 6 5 9 .8 -5 8 .62 3 04 -6 3 9 7 2 7 .0 -7 5 4 9 1 5 .5 P p an eq i m t, n ro erty d up en et 9 ,8 6 2 5 9 44 9,5 1 ,71 01 9 14 4 0 ,0 7 1 6,5 0 38 1 ,20 09 4 P e u d capta l ases:P p u d r ca i l ses 5 4 rop rty n er i l e ro erty n e ptal ea ,3 1 5,6 9 6 6 6 06 .4 6 9 .6 41 5 6 46 9 .72 7 3 8 43 .6 L ss ac ml d am rti ati n e cu uate o z o -2 4 ,5 4 -2 0 ,9 6 -3 3 4 21 .9 -3 43 5 .46 -3 6 8 89 .0 -4 3 2 27 .4 P p u de c i l ase n t ro erty n r aptal e s, e 2 9 ,7 7 2,7 3 6 2 2 6 85 .4 2 4 .1 98 9 3 50 0 .64 3 0 6 16 .2 G o wl o d il 1 ,2 0 5 6 1 26 6,1 126 3 7 5 .4 1 4 .11 8 66 170 8 9 6 .5 2 4 .8 11 5 O er a th ssets a d d erred c arg s n ef h e 3 6 ,5 7 3,9 2 4 4 8 3 21 .3 4 1 .0 54 4 4 30 8 .47 5 9 9 16 .0 T tal asse o ts $ 6 ,4 9 13 2 $ 7 ,7 6 10 0 $ 7 66 1 7,7 $ 8 ,3 0 15 2 $ 9 ,4 4 13 0 $ 2 ,0 2 2 50 L B IT SA DE U Y IA IL IE N Q IT C rren lablti u t i ii es: S o rmb rro i g h rt-te o wn s $ ,5 6 1 0 $2 53 5 .66 59 58 9 9 .8 60 8 4 .8 65 8 .8 A ou ts p a l cc n ay be 2 ,8 9 8 4 3 51 0,4 356 2 1 6 .6 3 9 .87 2 05 331 4 6 5 .2 399 7 9 2 .9 A cru lablti c ed i ii es 1 ,1 2 8 1 1 34 8,7 207 5 0 4 .2 2 4 .57 1 52 296 9 2 5 .3 255 3 4 6 .6 A cru i co e tax c ed n m es 67 7 1,3 5 6 1 2 .7 ,1 9 2 1,9 .5 00 0 2 8 6 ,6 2.0 3 9 .22 ,2 4 L n -termd t du wthno e y r og eb e i i n ea 5 4 ,8 8 4,0 0 5 4 9 1 54 .9 4 6 .7 85 1 15 11 8 2 1 29 .7 O lg o s u d ca i l ases du wthno e y bi ati n n er ptal e e i i n ear 35 1 36 4 3 .25 70 36 1 9 .2 43 8 2 .9 43 5 .7 C rren lablti o di co ti u o erati n u t i ii es f s n n ed p o s 8 3 9 2 9 .4 8 5 15 5 0 .3 12 4 1 .7 12 .6 0 4 T tal cu n lablti s o rre t i ii e 5 ,3 0 5 9 5 61 5,5 5 22 8,3 6 ,2 5 2 2 6 ,3 8 4 1 77 3 ,34 L n -termd t og eb 3 ,3 9 1 4 3 31 3,2 2 19 6,5 1 ,0 0 8 2 1 ,7 6 0 0 12 3 ,11 L n -termo lg ti n u d ca i l l og bi a o s n er pta eases 3 0 ,2 0 3,1 0 7 3 2 2 39 .2 3 3 .0 60 1 3 84 8 .48 4 6 8 15 .7 D f rre i co e tax s an o er e e d n m e d th 6 1 ,0 4 5,5 8 0 5 4 1 89 .1 6 0 .2 37 9 6 49 7 .43 7 2 6 22 .5 R eembl n n n ln i te ed a e o co troli g n rest 37 9 37 0 37 0 37 0 37 0 37 0 C m i e ts a d co ti g n i o m n n n n e ces tm E uty qi : P f rred sto ($ .1 p r v u 0 sh re e ck 0 0 a al e;1 0 ares au ori ed n n i 0 ) th z , o e ssu ed 0 0 C m o sto k ($ 0 p v u 1 0 sh s au o z d, 3 9 6 a d 3 25 i 7 e an o tsta dn8at Jan ary3 , 27 0 an Jan ary313 0 , resp v y 3 8 o m n c 0.1 ar al e;1 ,0 0 are th ri e 3 8 n ,9 3 8d d u n3 g ,73 ssu i7 u 1 31 d u 08 , 28 7 09 ecti el ) 7 C pi i ex ess o p v u a tal n c f ar al e 3 2 ,9 0 3,8 3 0 30 83 30 83 30 83 3 03 8 R n ea i g etai ed rnn s 6 ,6 0 3 6 6 38 6,6 7 4 .5 7,0 0 8 8 ,5 9 5 8 3 .1 1 1,1 .47 0 47 1 ,61 .3 14 6 8 A cu uate o er co p en v l ss c ml d th m reh si e o -2 8 ,6 8 -7 0 -7 0 -7 0 -7 0 -70 T tal Wl art sh od eq i o am areh l ers uty 6 ,2 5 5 8 7 49 0,7 8 52 1,1 9 ,6 0 2 5 1 5,2 0 58 1 ,72 18 7 N n n li gi terest o co troln n 1 9 ,7 4 2,1 0 8 2 8 ,1 0 2 8 ,1 0 2,1 80 2 8 ,1 0 T tal eq i o uty $7 7 6 ,0 9 $2 2 7 ,9 9 8 32 3,3 9 ,8 0 4 3 1 7,4 0 38 1 ,90 20 7 T tal lablti s an eq i o i ii e d uty $ 6 ,4 9 13 2 $ 7 ,7 6 10 0 1 ,76 77 6 15 2 8 ,3 0 1 3,4 9 04 2 ,04 22 9

2 5 01

2 6 01

21 07

F CO AT R

415 6 6 4 .1 5 1 .8 84 9 450 5 6 3 .3 4 8 .5 11 6 16 5 9 .4 1 28 8 1 0 6 .4 369 6 1 9 .8 1 86 1 1 0 8 .2 473 9 4 .7 3 0 .5 34 5 1 34 9 1 9 2 .3 -8 7 .3 13 3 2 12 5 1 ,0 6 7 5 .7 94 8 -46 7 2 7 .2 3 7 .5 27 6 268 2 2 2 .1 5 3 .4 51 4 $ 4 ,3 2 26 6 73 8 3 .8 479 6 2 2 .0 227 8 6 8 .6 3 2 0 ,93 .0 9 7 .9 96 9 45 1 8 .5 19 2 .1 8 ,27 4 4 1 ,33 4 1 4 4 .1 48 7 7 2 .8 78 7 30 7

5 0 .7 35 9 1 6 2 .5 22 1 4 9 .1 97 2 3 4 7 .6 44 8 21 .2 0 2 1 4 0 .2 129 5 3 2 .0 39 2 1 1 6 9 .7 129 6 5 3 .7 32 0 3 35 6 3 .2 2 6 8 .7 098 1 -9 8 .3 18 0 4 15 0 1 ,1 8 8 1 .4 52 1 -51 9 2 0 .3 3 0 .0 43 9 2 1 .3 42 4 5 59 9 1 .2 $ 6 ,8 4 22 5 78 .3 5 2 4 2 .3 57 4 7 2 9 .4 27 2 5 4 3 6 ,94 .6 2 9 .3 03 1 7 51 .5 9 4 13 .1 8 4 95 5 ,29 3 7 ,14 4 5 .9 79 8 8 7 .6 20 6 30 7

60 7 .2 35 2 6 5 .7 68 1 53 8 .5 22 6 4 8 .3 78 6 24 6 2 .9 1 5 2 .8 239 1 36 9 .9 29 5 1 4 5 .3 242 7 5 9 2.2 66 3 8 .0 74 9 2 1 9 .6 248 2 -10 1 3.9 32 18 7 1 ,3 5 9 0 .1 19 3 -5 7 .7 51 1 3 3 .4 57 2 25 1 .7 91 8 6 3 .1 34 3 $ 9 8 27 ,4 8 80 7 4 .3 48 2 .6 99 5 1 5 8.4 06 5 0 .2 ,7 2 0 26 2 .6 02 7 55 6 5 .9 17 3 4 .8 9 ,7 7 2 6 4 2 ,5 5 5 9 .6 03 6 8 5 .4 80 3 30 7

0 151 .0 9 2 0 121 .0 0 3 0 887 .0 1 6 $0 .01 0 036 .0 0 4 0 574 .0 5 7 0 928 .1 1 1 0 851 .0 7 2 0 084 .0 5 1 0 437 .3 0 2 0 4 6 .2 57 0 196 .0 3 9 -0.0 1 07 7 0 081 .0 6 2 0 383 .0 9 1 0 072 .0 9 3

0 021 .0 1 9 0 719 .0 5 7 0 422 .0 6 5 0 0 7 .0 33 0 099 .0 9 9 0 084 .0 0 5 0 027 .0 0 2 0 312 .1 7 7 0 803 .0 2 4 0 086 .0 7 2 0 158 .0 3 9 0 078 .0 0 5

37 8 3 3 80 1 8 8 .0 2 ,9 1 0 -7 0 13 9 3 ,0 2 2 8 ,1 0 15 7 3 ,2 2 26 6 4 ,3 1

37 8 3 3 80 14 4 5 4 ,78 .1 -7 0 18 9 4 ,8 5 2 0 ,18 11 7 5 ,0 5 22 5 6 ,8 5

37 8 30 83 16 ,6 4 2 1 5 .1 -7 0 15 6 6 ,7 5 2 8 ,1 0 17 4 6 ,9 5 29 8 7 ,4 8

Page 17 of 29

Exhibit # 3 relationship between sales and cost of sales Variables Entered/Removed(b) Variables Variables Model Entered Removed Method 1 SALES(a) . Enter a All requested variables entered. b Dependent Variable: COS Model Summary Adjusted Model R R Square R Square 1 1.000(a) 1.000 1.000 a Predictors: (Constant), SALES Sum of Model 1 Regression Residual Total Squares 14576786 076.150 5260188. 995 14582046 df 1 8 9 Mean Square 1457678607 6.150 657523.624 F 22169.22 0 Sig. .000(a) Std. Error of the Estimate $810.87830

ANOVA(b)

265.145 a Predictors: (Constant), SALES b Dependent Variable: COS

Coefficients(a) Unstandardized Model 1 Coefficients B Std. Error (Constant) 620.055 2307.137 SALES .755 .005 a Dependent Variable: COS Variables Entered/Removed(b) Variables Model Entered 1 SALES(a) Variables Removed Method . Enter Page 20 of 29 Standardized Coefficients Beta 1.000 t Sig. B Std. Error .269 .795 148.893 .000

Exhibit # 4 relationship between sales and operating expenses

a All requested variables entered. b Dependent Variable: OE Model Summary Model R R Square Adjusted R Square .996 Std. Error of the Estimate $582.46809

1 .998(a) .997 a Predictors: (Constant), SALES Model 1 Regression Residual Total Sum of Squares 80330066 7.792 2714152. 563 80601482

ANOVA(b) df Mean Square 803300667.7 92 339269.070 F Sig.

1 8 9

2367.739

.000(a)

0.355 a Predictors: (Constant), SALES b Dependent Variable: OE Coefficients(a) Model Unstandardized Coefficients B Std. Error (Constant) -559.771 1657.257 SALES .177 .004 a Dependent Variable: OE 1

Standardized Coefficients Beta .998

Sig.

B Std. Error -.338 .744 48.659 .000

Coefficients(a) Model Unstandardized Coefficients B Std. Error (Constant) -559.771 1657.257 SALES .177 .004 a Dependent Variable: OE 1 Standardized Coefficients Beta .998 B Std. Error -.338 .744 48.659 .000 t Sig.

Page 21 of 29

Exhibit # 5: MONTHLY RETURN OF WALMART AND SP500 Variables Entered/Removed(b) Variables Variables

Model Entered Removed Method 1 SP500(a) . Enter a All requested variables entered. b Dependent Variable: WALMART Model Summary Adjusted Model R R Square 1 .353(a) .124 a Predictors: (Constant), SP500 Sum of Model Squares 1 Regression 165.174 Residual 1161.793 Total 1326.967 a Predictors: (Constant), SP500 b Dependent Variable: WALMART Coefficients(a) Unstandardized Model 1 Coefficients B Std. Error (Constant) .214 .578 SP500 .324 .113 a Dependent Variable: WALMART Standardized Coefficients Beta .353 t Sig. B Std. Error .370 .713 2.872 .006 df 1 58 59 Mean Square 165.174 20.031 F 8.246 Sig. .006(a) R Square .109 Std. Error of the Estimate $4.47559

ANOVA(b)

Page 22 of 29

Exhibit # 6: ANALYSIS OF RISK BASED ON THE STOCK PRICE OF WAL-MART AND S&P 500 Regression Variables Entered/Removed(b) Variables Model Entered 1 SP500ADJ CLOSEPR Variables Removed Method . Enter

ICE(a) a All requested variables entered. b Dependent Variable: WALMARTADJCLOSEPRIC Model Summary Adjusted Std. Error of Model R R Square R Square the Estimate 1 .934(a) .872 .872 7.21023 a Predictors: (Constant), SP500ADJCLOSEPRICE ANOVA(b) Model Sum of Squares df Mean Square 1 Regression 162704.436 1 162704.436 Residual 23862.205 459 51.987 Total 186566.641 460 a Predictors: (Constant), SP500ADJCLOSEPRICE b Dependent Variable: WALMARTADJCLOSEPRIC Coefficients(a) Unstandardized Model 1 (Constant) SP500ADJCLOSEPRI Coefficients B Std. Error -5.231 .529 Standardized Coefficients Beta .934 t Sig. B Std. Error -9.880 .000 55.944 .000 F 3129.691 Sig. .000(a)

.039 .001 CE a Dependent Variable: WALMARTADJCLOSEPRIC

Exhibit 7: COMPUTATION OF DIVIDEND AND RETAINED EARNINGS 2008 12,73 Earnings Dividend 1 3586 2009 13,40 0 3746 2010 14,33 5 4217 2011 14,88 3 4,465 2012 16,45 1 4,935 2013 18,03 9 5,412 2014 19,27 0 5,781 2015 20,55 1 6,165 2016 22,61 0 6,783 2017 24,13 6 7,241 Page 23 of 26

Retained earning 8985 9183

10,11 8 10418 11516 12627 13489 14386 15827 16895

Exhibit 8: COMPUTATION OF RETENTION PERCENTAGE

Earnings Dividend retained earning Retention percentage AVERAGE

2008 12,731 3586 8985 71%

2009 13,400 3746 9183 69%

2010 14,335 4217 10,118 71% 70%

Exhibit 9: The working for capital structure is as follows Total current liabilities Long-term debt Long-term obligations under capital leases Redeemable non controlling interest Total debt Total equity Total debt and equity Total debt to total of debt and equity Average of the two years 2009 55390 31,349 3,200 397 90,336 $67,079 157,415 0.57 2010 55561 33,231 3,170 307 92,269 $72,929 165,198 0.56 0.57

Exhibit 10: The computation of effective tax rate is as follows: 2008 Income from continuing operations before income taxes Tax expenses Tax rate 20,158 6,889 0.34 2009 20,898 7,145 0.34 2010 22,066 7,139 0.32 Average

0.33

Page 24 of 26

Exhibit 11: Scenario Analysis: sales growth


S c en a rio An alys is: sa le s g ro w th
P rob: 50% 40% 10% P r edicted Fr ee Cas h Flows for Alter native S cenarios 2010 2011 2012 2013 2014 2015 2016 2017 W ACC NP V Dev iatio n S qrd dev S qrd* prob 1 0 ,9 8 5 .1 31 4 ,2 1 2 .2 21 5 ,2 3 8 .1 5 1 8 ,1 9 5 .6 2 (7 6 2 .7 2 )4 ,3 5 6 .1 1 8 ,6 9 9 .5 2 1 7 5 ,1 4 3 .9 4 0 .0 4 1 9 7 ,8 1 3 .8 7 5 5 ,9 8 1 .6 13 ,1 3 3 ,9 4 0 ,9 0 7 .2 81 ,5 6 6 ,9 7 0 ,4 5 3 .6 4 1 0 ,9 8 5 .1 31 3 ,3 0 5 .1 11 4 ,3 8 3 .2 1 1 7 ,4 0 3 .7 2 (1 ,4 7 9 .4 6 )3 ,7 2 8 .0 2 8 ,1 7 4 .9 0 1 0 ,9 8 5 .1 31 3 ,2 2 1 .5 41 4 ,3 0 3 .7 8 1 7 ,3 2 9 .4 3 (1 ,5 4 7 .5 8 )3 ,6 6 7 .3 7 8 ,1 2 3 .0 8 3 3 ,2 6 5 .6 6 0 .0 4 8 6 ,0 8 7 .8 5 (5 5 ,7 4 4 .4 13 ,1 0 7 ,4 3 9 ,4 9 9 .9 51 ,2 4 2 ,9 7 5 ,7 9 9 .9 8 ) (5 6 ,9 3 0 .4 13 ,2 4 1 ,0 7 1 ,8 1 2 .9 3 3 2 4 ,1 0 7 ,1 8 1 .2 9 ) Variance = 3 ,1 3 4 ,0 5 3 ,4 3 4 .9 2 = 5 5 ,9 8 2 .6 2

5% 6.2 7 .0 1 % 1 7.08 %

3 2 ,1 9 0 .3 7 0 .0 4 8 4 ,9 0 1 .8 5 Expec te d NP V = 4 1 ,8 3 2 .2 6 1 S tandar d Deviation (S D) 5 5 ,9 8 2 .6 2 = Coefficient of Variation (CV) = S td. D ev./Expected NP V0= 9 .3

Exhibit 12: Decision tree with multiple decision points


D e c is io n T re e w ith M u ltip le D e c is io n P o in ts
W ACC = k r e te n ti o n % T i m e P e r i o d s, E a r n i n g s, P r o b a b i l i ti e s, a n d D e c i si o n P o i n ts 2011
2010

4 .0 % 5 .0 % 7 0.0 % W ACC = NP V #R EF !
J o in t P r o b
P r o d u c t : N P VC a lc u la tin g s te p - b y-s te p

2012 e a rn in g

2013 e a rn in g

2014 e a rn in g

2015 e a rn i n g

2016 e a rn in g

2017 e a rn in g P ro b .

2 0 1 8 i n p e r p e tu ti y e a rn in g N P V
0 .3 5

P ro b .

E a rn in g

x J o in t P r o b

D e via tio n
( 2 7 2 ,6 4 3 .8 4 ) ( 1 3 5 ,5 9 9 .5 8 ) ( 2 1 1 ,9 0 4 .4 0 )

S q rd d e v

S q r d *p r o b

2 7 , 7 7 7 . 2 4( 4 8 6 , 1 0 1 . 6 5 ) 2 4 7 , 7 8 4 -$ 2 7 , 2 5 3 . 1 4 4 7 6 , 9 2 9 . 9 2$ 4 8 4 , 0 4 1 2 6 , 9 9 1 . 0 9 1 5 7 , 4 4 8 . 0 2$ 2 4 1 , 2 6 1 2 4 , 4 2 0 . 0 6 2 1 3 , 6 7 5 . 5 3$ 2 7 4 , 4 3 6

16% 20% 9% 30% 9% 11% 5%

(3 9 , 0 2 5 . 9 5 ) 9 8,0 1 8 .3 1 2 1,7 1 3 .5 0 8 2,3 3 0 .6 7 3 3,5 3 4 .5 2 2 7,2 7 2 .7 4 9 ,7 7 4 .10

7 4 ,3 3 4 ,6 6 3 ,7 9 4 .8 6 1 1 ,7 0 7 ,7 0 9 ,5 4 7 .6 9 1 8 ,3 8 7 ,2 4 6 ,0 0 2 .0 9 3 ,7 2 3 ,4 1 7 ,3 1 5 .4 2 4 4 ,9 0 3 ,4 7 3 ,4 9 3 .4 2 4 ,0 4 1 ,3 1 2 ,6 1 4 .4 1

4 5 % 1 5 ,6 2 5 .1 5

1 7 , 0 3 1 . 4 1 1 8 , 5 6 4 . 2 4 2 0 , 2 3 5 . 0 2 2 2 , 0 5 6 . 1 7 2 4 , 0 4 1 . 2 3 2 6 , 2 0 4 . 924

0 .4 5 0 .2 0

$ 1 4 , 3 3 51

30%

1 4 ,7 6 7 .7 0

1 6 ,2 0 5 .1 9

1 7 ,7 3 3 .3 8

1 8 ,7 9 8 .8 4

1 9 ,8 9 4 .2 8

2 1 ,7 4 4 .1 2

2 3 ,0 3 7 .7 9

( 1 5 1 ,2 8 7 .2 2 )

2 2 ,8 8 7 ,8 2 3 ,9 9 6 .3 2 6 ,8 6 6 ,3 4 7 ,1 9 8 .9 0

0 .3 5

2 0 , 9 7 7 . 6 2 3 6 7 , 1 0 8 . 2 8$ 3 8 3 , 2 5 2 2 0 , 7 7 5 . 9 1 1 8 1 , 7 8 9 . 2 0$ 2 4 2 , 4 2 4 2 0 , 5 7 4 . 2 0 1 2 0 , 0 1 6 . 1 7$ 1 9 5 , 4 8 2

( 2 0 0 ,0 8 3 .3 7 ) ( 2 0 6 ,3 4 5 .1 5 ) ( 2 2 3 ,8 4 3 .7 9 )

4 0 ,0 3 3 ,3 5 5 ,8 6 2 .3 5 3 ,5 0 2 ,9 1 8 ,6 3 7 .9 6 4 2 ,5 7 8 ,3 2 0 ,4 6 0 .8 0 4 ,7 9 0 ,0 6 1 ,0 5 1 .8 4 5 0 ,1 0 6 ,0 4 4 ,3 0 9 .4 8 2 ,5 0 5 ,3 0 2 ,2 1 5 .4 7

2 5 % 15 ,0 5 1 .7 5

2 1 5 ,8 0 4 .34 1 6 ,5 9 4.5 5 17 ,42 4 .2 8 18 ,2 9 5 .5 0 1 9 ,21 0 .2 7 2 0 ,1 7 0 .7 8

0 .4 5

0 .2 0

E x p e c te d N P V = 3 3 , 6 1 7 . 8 9 2 S ta n d a r d D e v i a ti o n (S 1 9) 2= 7 0 9 . 8 0 D , C o e ffi c i e n t o f V a r i a ti o n (C V ) = S td D e v / E x p e c te 0 . 8 2P V = d N
S u m = v a r ia n c e Sq ro o t o f V ar = 3 7 ,1 3 7 ,0 6 8 ,5 8 1 .6 9 1 9 2 ,7 0 9 .8 0

Exhibit 13: Scenario analysis: Change in dividend payout percentage Page 25 of 26

D ivid e n d p a y o u t P ro b % BEST BASE W ORST 0.4 0.3

2010

2011

2012

2013

2014

2015

2016

2017

2017 A C C W

NPV

D e v ia t io n

S qr d de v

S qr d* pr ob

17 5 9 $ 7 6 6 ,1 5 3 .7 5 2 , 3 8 4 . 2 9 , 7 1 6 , 4 4 8 , 2 6 4 .81,3 1 4 , 9 3 4 , 4 7 9 . 2 4 $ 5 7 4 ,6 1 5 .3-1 9 , 1 5 3 . 8 43 6 6 , 8 6 9 , 7 3 1 . 6 61 8 3 , 4 3 4 , 8 6 5 . 8 3 1 0 . 2 0 . 2 2 , 8 1 1 . 3 32 , 9 5 3 . 8 3 , 2 4 0 . 7 93 , 5 4 6 . 9 23 , 7 5 9 . 9 03 , 9 7 8 . 8 54 , 3 4 8 . 7 5 4 , 6 0 7 . 8 64 7 4 , 6 0 9 . 7 7 0 . 0 4 $ 3 8 3 ,0 7 6 .8 8 0 , 6 9 2 .4 4 , 3 9 1 , 2 3 7 , 5 3 0 .83, 6 7 8 , 2 4 7 , 5 0 6 . 0 7 0 -2 1 28 8 $= Ex pe c te d N P V 5 9 3 ,7 6 9 .1 6 S u m = va ria n c e1 7 , 9 7 6 , 6 1 6 , 8 5 1 . 1 4 1 S tan da r d D e vi ati on (S D )3=4 0 7 6 .9 1 S q ro o t o f V a r = 1 3 4 , 0 7 6 .9 1 $ .2 C o e ffic i e n t o f V a r i a ti o n (C V ) = S td. D e v./ Ex pe c te d0 N P3V = 0 . 3 5 , 6 2 2 . 6 75 , 9 0 7 . 6 6 , 4 8 1 . 5 87 , 0 9 3 . 8 37 , 5 1 9 . 7 97 , 9 5 7 . 7 08 , 6 9 7 . 4 9 9 , 2 1 5 . 7 29 4 9 , 2 1 9 . 5 4 0 . 0 4 0 0 . 5 4 , 2 1 7 . 0 04 , 4 3 0 . 7 4 , 8 6 1 . 1 95 , 3 2 0 . 3 85 , 6 3 9 . 8 45 , 9 6 8 . 2 86 , 5 2 3 . 1 2 6 , 9 1 1 . 7 97 1 1 , 9 1 4 . 6 5 0 . 0 4 0

Page 26 of 26

REFERENCE Ehrhardt. M.C. and Brigham. E.F. 2011, 2009. Corporate Finance: A Focused Approach, 4th ed., Ohio: South-Western Cengage Learning. http://en.wikipedia.org/wiki/Valuation (finance), viewed on July 17, 2011) http://www.bloomberg.com/markets/ www.finance.yahoo.com viewed on July 15, 2011 http://www.answers.com/topic/discounted-cash-flow viewed on 27 July 2011). http://www.investorwords.com/1618/earnings.html http://thismatter.com/money/stocks/valuation/book-liquidation-value-q-ratio.htm http://www.rmmag.com/Magazine/PrintTemplate.cfm?AID=2209(http://www.advfn.com/p.php? pid=financials&symbol=NYSE%3AWMT

Page 27 of 26