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Blue Font Means Hard Coding

Kd

Risk Free Rate 5% Rho (ρ)

Mkt Risk Premium 7.20% WACC

Debt Beta 0.25

Asset Beta 1.5 Debt-Equity RTax Rate 40% Ke

Terminal Growth Rate 5% (After 5 years) WACC_CCF

Capex ($ Thousands) 1500

Debt Ratio 40% (Assumption is D/V contant and as no number mentioned in t

FCF Method Valuation being done in 2001

2001 2002E

EBIT -20

Tax on EBIT -8

NOPAT -12

Add : Depreciation 200

Less: Capex 300

Less : Inc in Working Capital 0

Free Cash Flow -112

Terminal Levered Value

Levered Value Rs. 3,131.78 Rs. 3,704.53

NPV of the business Rs. 1,631.78

CCF Method

D/E required

Ke Req

WACC_CCF req

Debt Rs. 1,252.71 40% of V Seems high, b

2001 2002E

Debt Rs. 1,252.71 Rs. 1,481.81

Interest Rs. 85.18

Net Income -63.1106324

CCF Rs. -77.93CCF Check Rs. -77.93

Terminal Value

Levered Value Rs. 3,131.78

FCFE Method

2001 2002E

FCFE Rs. 65.99

Assumptions

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Terminal Value

Equity Value Rs. 1,879.07

Equity Value Check Rs. 1,879.07

APV Method

All discounting at Rho

2001 2002ETerminal Unlevered Vaue

Unlevered Value Rs. 2,728.49 Discounting u

Tax Shield Rs. 34.07

Terminal Value of Tax Shield

Value of Tax Shield Rs. 403.29

Levered Value Rs. 3,131.78

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6.800%

15.800%

14.712% Reconfirm 14.71200% Using Ke calculated during CCF

40 is debt, 60 must be equity

66.67%21.800%

15.800%

he case)

2003E 2004E 2005E 2006E

135 335 565 825

54 134 226 330

81 201 339 495

225 250 275 300

300 300 300 300

0 0 0 0

6 151 314 495

Rs. 5,351.63

Rs. 4,243.54 Rs. 4,716.85 Rs. 5,096.79 Rs. 5,351.63 these 2 figures should exactly tally

t NPV built into that EV figure of 3131

2003E 2004E 2005E 2006E

Rs. 1,697.41 Rs. 1,886.74 Rs. 2,038.71 Rs. 2,140.65

Rs. 100.76 Rs. 115.42 Rs. 128.30 Rs. 138.63 Last yr debt used for calculating next yr's interes

20.5421313 131.74549 262.021086 411.820428

Rs. 46.31 Rs. 197.17 Rs. 365.32 Rs. 550.45 FCF + Tax Shield which is Int*Tax RateRs. 46.31 Rs. 197.17 Rs. 365.32 Rs. 550.45 Net Income + Depreciation - Capex + Interest pai

5351.62685 Should Tally

2003E 2004E 2005E 2006E

Rs. 161.15 Rs. 271.07 Rs. 389.00 Rs. 513.76 Additional debt assumed to be distributed as div

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3210.97611 (Terminal Value - Last Yr Debt) should give the s

Rs. 3,210.98

2003E 2004E 2005E 2006ERs. 4,812.50 Using Last Free Cash Flow

levered cash flow at unlevered cost of equity  Using FCF and (Last Yr FCF + Terminal Value)

Rs. 40.31 Rs. 46.17 Rs. 51.32 Rs. 55.45 Interest * Tax Rate

539.126853

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t

id

idend, hence added here

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me value