Investment and Financing of the IMC Subsidiary in Mexico

INVESTMENT
Current exchange rate, Ps/US$

FINANCING
7.20

Expected Mexican inflation annually

20.00%

Expected US inflation annually

10.00%

Installed capacity in units w/ 10% p.a. growth for 10 yrs

Selling price per unit w/ 20% annual increase, Ps

200
$9,000,000.00

Investment in imported equipment & machinery in Ps

65,500,000.00

Investment in land sold by gov't in US$

$902,777.78

Investment in land sold by gov't in Ps

6,500,000.00

Share of investment of IMC in subsidiary in US$

Total Investment in US$
Total Investment in Ps

Total

6,550,000.00
$6,000,000.00
9,902,777.78
72,000,000.00

Cost of Capital: IMC (Parent)

Corporate tax rate

35.00%

Cost of debt pre-tax

12.00%

Cost of debt after tax

Marginal cost of new long term debt pre-tax
Marginal cost of new long term debt after tax
Effective cost of debt in foreign currencies
Shareholder's equity

7.80%
14.00%
9.10%
16.00%
$1,500,000,000.00

Dividend per share

$3.20

Annual dividend growth over last 10 years

7.00%

Share price
Total no. of shares outstanding as of last 12/31

$40.00
60,000,000.00

Cost of Capital: IMC MEXICO

IMC Mexico corporate tax rate

42.00%

Withholding taxes on licensing and overhead

20.00%

allocation fess
Cost of peso debt for working capital pre tax
Cost of peso debt for working capital after tax
Peso securities investment rate

15.00%
8.70%
15.00%

$10,000,000.00

72,000,000.00

Peso debt

$0.00

0.00

US$ debt, Ps

$0.00

0.00

10,000,000.00

72,000,000.00

Debt

458,000.00

Investment in imported equipment & machinery in US$

Annual depreciation for 10 years, Ps

Equity

WACC

IMC MEXICO Pro Forma Income Statement

Exchange Rate (Ps/US$)

Project Year
Sales volume
Sales price (US$)
Sales price (Ps)

given

7.20
YEAR 0

7.85
YEAR 1

8.57
YEAR 2

9.35
YEAR 3

10.20
YEAR 4

11.12
YEAR 5

12.14
YEAR 6

13.24
YEAR 7

14.44
YEAR 8

15.76
YEAR 9

17.19
YEAR 10

200

220

242

266

293

322

354

390

429

472

58,310.19

64,141.20

70,555.32

77,610.86

85,371.94

93,909.14

103,300.05

113,630.05

124,993.06

137,492.37

458,000.00

549,600.00

659,520.00

791,424.00

949,708.80

1,139,650.56

1,367,580.67

1,641,096.81

1,969,316.17

2,363,179.40

91,600,000.00

120,912,000.00

159,603,840.00

210,677,068.80

278,093,730.82

367,083,724.68

484,550,516.57

639,606,681.88

844,280,820.08

1,114,450,682.50

Imported parts & components from IMC

(11,800,000.00)

(12,980,000.00)

(14,278,000.00)

(15,705,800.00)

(17,276,380.00)

(19,004,018.00)

(20,904,419.80)

(22,994,861.78)

(25,294,347.96)

(27,823,782.75)

Local material & labor costs

(27,400,000.00)

(32,880,000.00)

(39,456,000.00)

(47,347,200.00)

(56,816,640.00)

(68,179,968.00)

(81,815,961.60)

(98,179,153.92)

(117,814,984.70)

(141,377,981.64)

Total revenue, Ps
Less cost of goods sold

Manufacturing Overhead (w/o dep)

(9,200,000.00)

(10,580,000.00)

(12,167,000.00)

(13,992,050.00)

(16,090,857.50)

(18,504,486.13)

(21,280,159.04)

(24,472,182.90)

(28,143,010.34)

(32,364,461.89)

(48,400,000.00)

(56,440,000.00)

(65,901,000.00)

(77,045,050.00)

(90,183,877.50)

(105,688,472.13)

(124,000,540.44)

(145,646,198.60)

(171,252,343.00)

(201,566,226.28)

43,200,000.00

64,472,000.00

93,702,840.00

133,632,018.80

187,909,853.32

261,395,252.55

360,549,976.13

493,960,483.28

673,028,477.08

912,884,456.22

47.16%

53.32%

58.71%

63.43%

67.57%

71.21%

74.41%

77.23%

79.72%

81.91%

Variable & selling & admin costs

(9,160,000.00)

(12,091,200.00)

(15,960,384.00)

(21,067,706.88)

(27,809,373.08)

(36,708,372.47)

(48,455,051.66)

(63,960,668.19)

(84,428,082.01)

(111,445,068.25)

Semi fixed selling costs

(4,580,000.00)

(5,267,000.00)

(6,057,050.00)

(6,965,607.50)

(8,010,448.63)

(9,212,015.92)

(10,593,818.31)

(12,182,891.05)

(14,010,324.71)

(16,111,873.42)

(4,600,000.00)

(5,520,000.00)

(6,624,000.00)

(7,948,800.00)

(9,538,560.00)

(11,446,272.00)

(13,735,526.40)

(16,482,631.68)

(19,779,158.02)

(23,734,989.62)

(920,000.00)

(1,104,000.00)

(1,324,800.00)

(1,589,760.00)

(1,907,712.00)

(2,289,254.40)

(2,747,105.28)

(3,296,526.34)

(3,955,831.60)

(4,746,997.92)

24,860,000.00

41,593,800.00

65,061,406.00

97,649,904.42

Depreciation (straight line over 10 yrs)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

(6,550,000.00)

EBIT

18,310,000.00

35,043,800.00

58,511,406.00

91,099,904.42

136,001,471.61

197,478,592.17

281,215,579.77

394,784,292.36

548,260,912.35

755,042,524.93

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Total production costs

Gross profit
Gross Margin
Less selling & administrative costs

Less licensing & overhead allocation fess

Licensing & overhead allocation fees
Withholding tax on lic. Fees/ovrhd alloc.
EBITDA

142,551,471.61

204,028,592.17

287,765,579.77

401,334,292.36

554,810,912.35

761,592,524.93

Less depreciation

Less interest expense

Local interest expense @ 15% for wc
Interest Income @ 15%
EBT

18,310,000.00

35,043,800.00

58,511,406.00

91,099,904.42

136,001,471.61

197,478,592.17

281,215,579.77

394,784,292.36

548,260,912.35

755,042,524.93

Less income tax @ 42%

(7,690,200.00)

(14,718,396.00)

(24,574,790.52)

(38,261,959.86)

(57,120,618.08)

(82,941,008.71)

(118,110,543.50)

(165,809,402.79)

(230,269,583.19)

(317,117,860.47)

Net income, Ps

10,619,800.00

20,325,404.00

33,936,615.48

52,837,944.56

78,880,853.53

114,537,583.46

163,105,036.26

228,974,889.57

317,991,329.16

437,924,664.46

1,352,057.87

2,372,081.29

3,630,532.66

5,181,543.82

7,090,817.38

9,438,090.87

12,320,120.30

15,854,292.80

20,183,000.62

25,478,936.74

Net income, US$

Return on sales
Dividends, Ps
Dividends, US$

11.59%

16.81%

21.26%

25.08%

28.36%

31.20%

33.66%

35.80%

37.66%

39.30%

0.00

0.00

0.00

22,191,936.72

33,129,958.48

48,105,785.05

68,504,115.23

96,169,453.62

133,556,358.25

183,928,359.07

$0.00

$0.00

$0.00

$2,176,248.40

$2,978,143.30

$3,963,998.16

$5,174,450.53

$6,658,802.98

$8,476,860.26

$10,701,153.43

49.29%

45.20%

42.40%

40.38%

38.88%

37.72%

IMC Mexico's Capital Budget: Project Viewpoint

Exchange Rate (Ps/US$)

7.20

Project Year

YEAR 0

Sales volume
Sales price (US$)
Sales price (Ps)

7.85
YEAR 1

8.57
YEAR 2

9.35
YEAR 3

10.20
YEAR 4

11.12
YEAR 5

12.14
YEAR 6

13.24
YEAR 7

14.44
YEAR 8

15.76
YEAR 9

17.19
YEAR 10

200.00

220.00

242.00

266.20

292.82

322.10

354.31

389.74

428.72

471.59

58,310.19

64,141.20

70,555.32

77,610.86

85,371.94

93,909.14

103,300.05

113,630.05

124,993.06

137,492.37

458,000.00

549,600.00

659,520.00

791,424.00

949,708.80

1,139,650.56

1,367,580.67

1,641,096.81

1,969,316.17

2,363,179.40

91,600,000.00

120,912,000.00

159,603,840.00

210,677,068.80

278,093,730.82

367,083,724.68

484,550,516.57

639,606,681.88

844,280,820.08

1,114,450,682.50

Imported parts & components from IMC

(11,800,000.00)

(12,980,000.00)

(14,278,000.00)

(15,705,800.00)

(17,276,380.00)

(19,004,018.00)

(20,904,419.80)

(22,994,861.78)

(25,294,347.96)

(27,823,782.75)

Local material & labor costs

(27,400,000.00)

(32,880,000.00)

(39,456,000.00)

(47,347,200.00)

(56,816,640.00)

(68,179,968.00)

(81,815,961.60)

(98,179,153.92)

(117,814,984.70)

(141,377,981.64)

Total revenue, Ps
Less cost of goods sold

Manufacturing Overhead (w/o dep)

Total production costs
Gross profit
Gross Margin

(9,200,000.00)

(10,580,000.00)

(12,167,000.00)

(13,992,050.00)

(16,090,857.50)

(18,504,486.13)

(21,280,159.04)

(24,472,182.90)

(28,143,010.34)

(32,364,461.89)

(48,400,000.00)

(56,440,000.00)

(65,901,000.00)

(77,045,050.00)

(90,183,877.50)

(105,688,472.13)

(124,000,540.44)

(145,646,198.60)

(171,252,343.00)

(201,566,226.28)

43,200,000.00

64,472,000.00

93,702,840.00

133,632,018.80

187,909,853.32

261,395,252.55

360,549,976.13

493,960,483.28

673,028,477.08

912,884,456.22

47.16%

53.32%

58.71%

63.43%

67.57%

71.21%

74.41%

77.23%

79.72%

81.91%

Variable & selling & admin costs

(9,160,000.00)

(12,091,200.00)

(15,960,384.00)

(21,067,706.88)

(27,809,373.08)

(36,708,372.47)

(48,455,051.66)

(63,960,668.19)

(84,428,082.01)

(111,445,068.25)

Semi fixed selling costs

(4,580,000.00)

(5,267,000.00)

(6,057,050.00)

(6,965,607.50)

(8,010,448.63)

(9,212,015.92)

(10,593,818.31)

(12,182,891.05)

(14,010,324.71)

(16,111,873.42)

Licensing & overhead allocation fees

(4,600,000.00)

(5,520,000.00)

(6,624,000.00)

(7,948,800.00)

(9,538,560.00)

(11,446,272.00)

(13,735,526.40)

(16,482,631.68)

(19,779,158.02)

(23,734,989.62)

EBITDA

24,860,000.00

41,593,800.00

65,061,406.00

97,649,904.42

142,551,471.61

204,028,592.17

287,765,579.77

401,334,292.36

554,810,912.35

761,592,524.93

Less recalculated taxes

(10,441,200.00)

(17,469,396.00)

(27,325,790.52)

(41,012,959.86)

(59,871,618.08)

(85,692,008.71)

(120,861,543.50)

(168,560,402.79)

(233,020,583.19)

(319,868,860.47)

Net operating cash flow

14,418,800.00

24,124,404.00

37,735,615.48

56,636,944.56

82,679,853.53

118,336,583.46

166,904,036.26

232,773,889.57

321,790,329.16

441,723,664.46

(45,584,994.52)

(19,154,530.25)

(25,863,155.73)

(34,816,094.13)

(46,748,838.94)

(62,635,429.19)

(83,765,385.69)

(111,845,382.47)

(149,133,590.99)

(198,617,179.28)

(22,191,936.72)

(33,129,958.48)

(48,105,785.05)

(68,504,115.23)

(96,169,453.62)

(133,556,358.25)

(183,928,359.07)

Less selling & administrative costs

Less licensing & overhead allocation fess

Less
Additions to working capital
Initial investment

(72,000,000.00)

Dividends

Terminal value

3,662,716,952.41

Free cash flow

(72,000,000.00)

(31,166,194.52)

NPV

816,900,681.05

0.00

IRR

WACC =

46.34%

4,969,873.75

11,872,459.75

(371,086.28)

2,801,056.11

7,595,369.21

14,634,535.35

24,759,053.48

39,100,379.92

3,721,895,078.52

IMC Mexico's Remittance and Capital Budget: Parent Viewpoint

Exchange Rate (Ps/US$)

Project Year

7.20

7.85

8.57

9.35

0.00

0.00

0.00

Dividend Remittance
Dividends Paid (Ps)
Net dividend remitted (Ps)
Net dividend remitted (US$)

0.00

0.00

0.00

$0.00

$0.00

$0.00

License Fees & Overhead Alloc.Remittance

License fees & Overhead Alloc. remitted (Ps)

4,600,000.00

Less withholding tax

5,520,000.00

6,624,000.00

(1,104,000.00)

(1,324,800.00)

3,680,000.00

4,416,000.00

5,299,200.00

468,518.52

515,370.37

566,907.41

(920,000.00)

Net license fees/Overhead Alloc. remitted (Ps)

Net license fees/Overhead Alloc. remitted (US$)

Capital Budget: Parent Viewpoint

Net Dividends

Net License Fees/Overhead Alloc.

468,518.52

515,370.37

566,907.41

Total Earnings

468,518.52

515,370.37

566,907.41

$468,518.52

$515,370.37

$566,907.41

Initial investment

-10,000,000.00

Terminal Value
Free cash flow (FCF)

-$10,000,000.00

NPV

$56,588,126.24

IRR

WACC =

43.35%

10.20

11.12

12.14

13.24

14.44

15.76

22,191,936.72

33,129,958.48

48,105,785.05

68,504,115.23

96,169,453.62

133,556,358.25

22,191,936.72

33,129,958.48

48,105,785.05

68,504,115.23

96,169,453.62

133,556,358.25

$2,176,248.40

$2,978,143.30

$3,963,998.16

$5,174,450.53

$6,658,802.98

$8,476,860.26

7,948,800.00

9,538,560.00

11,446,272.00

13,735,526.40

16,482,631.68

19,779,158.02

(1,589,760.00)

(1,907,712.00)

(2,289,254.40)

(2,747,105.28)

(3,296,526.34)

(3,955,831.60)

6,359,040.00

7,630,848.00

9,157,017.60

10,988,421.12

13,186,105.34

15,823,326.41

623,598.15

685,957.96

754,553.76

830,009.14

913,010.05

1,004,311.05

2,176,248.40

2,978,143.30

3,963,998.16

5,174,450.53

6,658,802.98

8,476,860.26

623,598.15

685,957.96

754,553.76

830,009.14

913,010.05

1,004,311.05

2,799,846.55

3,664,101.26

4,718,551.92

6,004,459.66

7,571,813.03

9,481,171.31

$2,799,846.55

$3,664,101.26

$4,718,551.92

$6,004,459.66

$7,571,813.03

$9,481,171.31

17.19
10

183,928,359.07
183,928,359.07
$10,701,153.43

23,734,989.62
(4,746,997.92)
18,987,991.70
1,104,742.16

10,701,153.43
1,104,742.16
11,805,895.59

$213,100,884.94
$224,906,780.53

Parent company capital structure

Equity
Shareholders' Equity

1,500,000,000.00

0.483870968

(capital surplus, retained earnings)

No. of shares outstanding as of 12/31

60,000,000.00

Per Share Market price

40.00

Book equity per share

25.00

Dividend growth = 7%
Dividend per share

3.20

Earnings per share

6.22

Earnings

373,440,000.00

Market value of parent

Cost of Equity

15.56%

Debt
Domestic debt

1,000,000,000.00

Ave. before tax int. cost is 12%

Cost of new long term debt is 14%
Debt in foreign currencies

600,000,000.00

Ave. cost of debt is 16%

Total Debt

1,600,000,000.00

Average cost of debt

0.14

After tax cost of debt

0.09

Total Equity & Debt

Parent Company WACC =

3,100,000,000.00

ke x E + kd x D
V
0.1206

0.516129032

Change in working capital

Current Assets
0
Cash balance
Accounts Receivable

10

4,580,000.00

6,045,600.00

7,980,192.00

10,533,853.44

13,904,686.54

18,354,186.23

24,227,525.83

31,980,334.09

42,214,041.00

55,722,534.13

1,254,794.52

1,656,328.77

2,186,353.97

2,885,987.24

3,809,503.16

5,028,544.17

6,637,678.31

8,761,735.37

11,565,490.69

15,266,447.71

Inventory

18,320,000.00

24,182,400.00

31,920,768.00

42,135,413.76

55,618,746.16

73,416,744.94

96,910,103.31

127,921,336.38

168,856,164.02

222,890,136.50

Total current assets

24,154,794.52

31,884,328.77

42,087,313.97

55,555,254.44

73,332,935.87

96,799,475.34

127,775,307.45

168,663,405.84

222,635,695.71

293,879,118.33

Accounts Payable

9,160,000.00

12,091,200.00

15,960,384.00

21,067,706.88

27,809,373.08

36,708,372.47

48,455,051.66

63,960,668.19

84,428,082.01

111,445,068.25

Other payables

4,580,000.00

6,045,600.00

7,980,192.00

10,533,853.44

13,904,686.54

18,354,186.23

24,227,525.83

31,980,334.09

42,214,041.00

55,722,534.13

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

7,690,200.00

14,718,396.00

24,574,790.52

38,261,959.86

57,120,618.08

82,941,008.71

118,110,543.50

165,809,402.79

230,269,583.19

317,117,860.47

21,430,200.00

32,855,196.00

48,515,366.52

69,863,520.18

98,834,677.70

138,003,567.41

190,793,120.99

261,750,405.07

356,911,706.20

484,285,462.85

Short term liabilities

Licensing & overhead alloc. Fees

Income taxes payable
Total Liabilities
Investments
Net change in working capital

0.00
45,584,994.52

64,739,524.77

90,602,680.49

125,418,774.62

172,167,613.56

234,803,042.75

318,568,428.44

430,413,810.91

579,547,401.90

778,164,581.18

-45,584,994.52

-19,154,530.25

-25,863,155.73

-34,816,094.13

-46,748,838.94

-62,635,429.19

-83,765,385.69

-111,845,382.47

-149,133,590.99

-198,617,179.28

Balance Sheet of IMC Mexico

Current Assets
YEAR 0
Cash balance
Accounts Receivable

YEAR 1

YEAR 2

9,160,000.00

2,931,200.00

YEAR 3

YEAR 4

13,029,184.00

YEAR 5

8,038,522.88

YEAR 6

19,770,850.20

YEAR 7

16,937,522.27

YEAR 8

31,517,529.39

YEAR 9

32,443,138.80

YEAR 10

51,984,943.21

59,460,125.04

1,254,794.52

1,656,328.77

2,186,353.97

2,885,987.24

3,809,503.16

5,028,544.17

6,637,678.31

8,761,735.37

11,565,490.69

15,266,447.71

Inventory

18,320,000.00

24,182,400.00

31,920,768.00

42,135,413.76

55,618,746.16

73,416,744.94

96,910,103.31

127,921,336.38

168,856,164.02

222,890,136.50

Total current assets

28,734,794.52

28,769,928.77

47,136,305.97

53,059,923.88

79,199,099.53

95,382,811.38

135,065,311.02

169,126,210.54

232,406,597.91

297,616,709.25

Long Term Assets

Land

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

6,500,000.00

Plant & equipment

65,000,000.00

65,000,000.00

65,000,000.00

65,000,000.00

65,000,000.00

65,000,000.00

65,000,000.00

65,000,000.00

65,000,000.00

65,000,000.00

less Dep.

(6,550,000.00)

(13,100,000.00)

(19,650,000.00)

(26,200,000.00)

(32,750,000.00)

(39,300,000.00)

(45,850,000.00)

(52,400,000.00)

(58,950,000.00)

(65,500,000.00)

Total Long term assets

64,950,000.00

58,400,000.00

51,850,000.00

45,300,000.00

38,750,000.00

32,200,000.00

25,650,000.00

19,100,000.00

12,550,000.00

6,000,000.00

Total assets

93,684,794.52

87,169,928.77

98,986,305.97

98,359,923.88

117,949,099.53

127,582,811.38

160,715,311.02

188,226,210.54

244,956,597.91

303,616,709.25

Accounts Payable

9,160,000.00

12,091,200.00

15,960,384.00

21,067,706.88

27,809,373.08

36,708,372.47

48,455,051.66

63,960,668.19

84,428,082.01

111,445,068.25

Other payables

4,580,000.00

6,045,600.00

7,980,192.00

10,533,853.44

13,904,686.54

18,354,186.23

24,227,525.83

31,980,334.09

42,214,041.00

55,722,534.13

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

7,690,200.00

14,718,396.00

24,574,790.52

38,261,959.86

57,120,618.08

82,941,008.71

118,110,543.50

165,809,402.79

230,269,583.19

317,117,860.47

Total Liabilities

21,430,200.00

32,855,196.00

48,515,366.52

69,863,520.18

98,834,677.70

138,003,567.41

190,793,120.99

261,750,405.07

356,911,706.20

484,285,462.85

Equity

43,200,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Stockholders equity

43,200,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

72,000,000.00

Total Liabilities & equity

64,630,200.00

104,855,196.00

120,515,366.52

141,863,520.18

170,834,677.70

210,003,567.41

262,793,120.99

333,750,405.07

428,911,706.20

556,285,462.85

29,054,594.52

-17,685,267.23

-21,529,060.55

-43,503,596.29

-52,885,578.17

-82,420,756.04

-102,077,809.97

-145,524,194.53

-183,955,108.28

-252,668,753.60

Liabilities
Short term liabilities

Licensing & overhead alloc. Fees

Less withholding tax
Income taxes payable

Retained Earnings

Exports lost by parent company

Exhange Rate (Ps/US$)
Project Year

7.20

7.85

8.57

After tax cash flow

Exports No. of Units
Exports Value, Ps
Exports Value, US$
After tax effects on income

25

25

0.00

11,450,000.00

16,488,000.00

$1,457,754.63

$1,924,236.11

(648,000.00)

(742,000.00)

(930,000.00)

Net Income

$373,440,000.00

$399,580,800.00

$427,551,456.00

Consolidated Income

$372,792,000.00

$398,838,800.00

$426,621,456.00

Per share after tax effects on income

$6.21

$6.65

$7.11

Per share dividend

$0.53

$0.57

$0.61

9.35

10.20

11.12

12.14

13.24

25

19,785,600.00

0.00

0.00

0.00

0.00

$2,116,659.72

$0.00

$0.00

$0.00

$0.00

$457,480,057.92

$489,503,661.97

$523,768,918.31

$560,432,742.59

$599,663,034.58

$457,480,057.92

$489,503,661.97

$523,768,918.31

$560,432,742.59

$599,663,034.58

$7.62

$8.16

$8.73

$9.34

$9.99

$0.65

$0.70

$0.75

$0.80

$0.86

14.44

15.76

17.19

10

0.00

0.00

0.00

$0.00

$0.00

$0.00

$641,639,447.00

$686,554,208.29

$734,613,002.87

$641,639,447.00

$686,554,208.29

$734,613,002.87

$10.69

$11.44

$12.24

$0.92

$0.98

$1.05

Parent Company Dividend Per Share

Project Year

Dividend w/o exports loss

$3.20

$3.42

$3.66

$3.92

$4.19

Per share dividend incl. exports loss

$0.00

$0.00

$0.00

$0.00

$0.00

Difference

$3.20

$3.42

$3.66

$3.92

$4.19

10

$4.49

$4.80

$5.14

$5.50

$5.88

$6.29

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

$4.49

$4.80

$5.14

$5.50

$5.88

$6.29

Parent company
P0

Div 1

40

r - g

(r-7%)
r

r (cost of equity)

3.424

15.56%

=
2.8

EPS

1.2228571

Po
EPS

Dividend Yield

r x Po

EPS

Div 1

DY

(15.56%*40)

6.22

3.424

P0

40
=

Plowback ratio

=
=

1 - payout ratio

Plowback

0.0856

[1-(3.2/6)]

0.4666667

Payout

0.5333333

ROE

1 - DIV
EPS

Payout ratio

1 - Plowback ratio

Dividend growth rate

plowback ratio x ROE

ROE

Dividend growth rate

Plowback ratio

7%
0.4666667

0.15

Changes in Financial Position of Mexican Subsidiary

Exhange Rate (Ps/US$)

Project Year

7.20

7.85

8.57

91600000

120912000

91,600,000.00

120,912,000.00

Operations
Cash received
Net Sales
Other
0

Cash Expended
Variable & selling & admin costs

9160000

12091200

Semifixed selling costs

4580000

5267000

Accounts Payable

9160000

12091200

Other payables

4580000

6045600

Licensing & overhead alloc. Fees

4600000

5520000

-920000

-1104000

Interest Expense

Dividends

Less withholding tax

Taxes

Net change in cash

10441200

17469396

0.00

41,601,200.00

57,380,396.00

0.00

49,998,800.00

63,531,604.00

9.35

10.20

11.12

12.14

13.24

159603840

210677069

278093731

367083725

484550517

159,603,840.00

210,677,068.80

278,093,730.82

367,083,724.68

484,550,516.57

15960384

21067707

27809373

36708372

48455052

6057050

6965608

8010449

9212016

10593818

15960384

21067707

27809373

36708372

48455052

7980192

10533853

13904687

18354186

24227526

6624000

7948800

9538560

11446272

13735526

-1324800

-1589760

-1907712

-2289254

-2747105

22191937

33129958

48105785

68504115

27325791

41012960

59871618

85692009

120861544

78,583,000.52

129,198,811.27

178,166,305.89

243,937,758.45

332,085,527.30

81,020,839.48

81,478,257.53

99,927,424.93

123,145,966.23

152,464,989.27

14.44

15.76

17.19

10

639606682

844280820

1114450683

639,606,681.88

844,280,820.08

1,114,450,682.50

63960668

84428082

111445068

12182891

14010325

16111873

63960668

84428082

111445068

31980334

42214041

55722534

16482632

19779158

23734990

-3296526

-3955832

-4746998

96169454

133556358

183928359

168560403

233020583

319868860

450,000,523.27

607,480,797.58

817,509,755.28

189,606,158.60

236,800,022.50

296,940,927.22