Nicholson--- Free Cash Flows (Millions US $)

Reales
1971
Sales (a)
55.3
Costs of Sales (b)
37.9
Administrative Costs
12.3
Depreciations
2.1
Other Expenses
0.2
Earnings before taxes
2.8
Taxes (40%)
1.1
Earnings after taxes
1.7
+ Depreciation
2.1
Operating Cash-Flow
3.8
- Changes in Working Capital
-1.5
- Fixed Capital Investments (d)
-2.1
Residual Value (e)
Free Cash Flow
0.2
Present Value of Cash Flows
$51.74
- Long Term Debt
12
Equity Value (max.)
$39.74
Value per share (f)
$68.05

1972
58.6
39.3
12.3
2.1
0.2
4.7
1.9
2.8
2.1
4.9
-1.5
-2.1

Projections
1973
62.1
40.4
12.4
2.1
0.2
7.0
2.8
4.2
2.1
6.3
-1.5
-2.1

1974
65.9
42.8
12.5
2.1
0.2
8.2
3.3
4.9
2.1
7.0
-1.6
-2.1

1975
69.8
45.4
13.3
2.1
0.2
8.9
3.5
5.3
2.1
7.4
-1.7
-2.1

1.4

2.7

3.3

3.6

(a)Assume an anual growth rate of 6%

(b)Assume they account for 67% (1972) and 65% (1973 onwards) of sale volume
Assume they account for 21%,20% and19% for 1972, 1973, and 1974 onwards
(d) Asuem then equal to depreciation
(e) Assume a perpetuity with a 3% growth rate
(f)There are 584000 shares of Nicholson
Nicholsons Cost of Capital
Cost of Debt
Tax Rate
Cost of Equity
Leverage ratio
WACC

6.60%
40%
13%
0.31
10.20%

1976
74.0
48.1
14.1
2.1
0.2
9.5
3.8
5.7
2.1
7.8
-1.8
-2.1

1977
78.4
51.0
14.9
2.1
0.2
10.3
4.1
6.2
2.1
8.3
-2.0
-2.1

1978
83.2
54.0
15.8
2.1
0.2
11.0
4.4
6.6
2.1
8.7
-2.1
-2.1

1979
88.1
57.3
16.7
2.1
0.2
11.8
4.7
7.1
2.1
9.2
-2.2
-2.1

1980
93.4
60.7
17.8
2.1
0.2
12.6
5.1
7.6
2.1
9.7
-2.3
-2.1

3.9

4.2

4.5

4.9

5.3

1981
99.0
64.4
18.8
2.1
0.2
13.5
5.4
8.1
2.1
10.2
-2.5
-2.1
78.6
84.3