2009-10 2010-11 2011-12 2012-13

Income 3000 4930 6900 7200

Contract exp 2200 3100 4900 5700
Oth Exp 564 1404 1538 675
EBITDA 236 426 462 825
Dep 10 15 20 25
EBIT 226 411 442 800
Fincost 65 140 170 295
PBT 161 271 272 505
TAX 53 89 90 167
PAT 107 182 182 340
NW 200 382 564 904
Debt 500 1069 1410 2260
Total 700 1451 1974 3164
FA 100 371 456 860
CA 600 1080 1518 2304
Total 700 1451 1974 3164

ROA PAT/total assets 0.153 0.125 0.092 0.107

ROE PAT/equity 0.535 0.476 0.323 0.376
TIE PBIT/int 3.477 2.936 2.600 2.712
DEBT RATIO Debt/ total assets 0.714 0.737 0.714 0.714
NP RATIO pat/SALES 0.036 0.037 0.026 0.047

EBIT(1-TAX RATE) OPERATING PROFIT

151.42

Net worth equity+R&S 307 564 746 1244

EBITDA MARGIN
EBIT MARGIN
CONT/SALES
INT COVERAGE
DEBT/EQUITY
OTHER EXP/SALE
CA AS % OF SALE
BVPS
EPS
2013-14 2014-15 cagr END VALUE/BEG VAL^(1/n-1)-1)*100
8140 11000 1.2967441161 0.296744 29.67441
6100 7700
635 1070
1405 2230
60 80
1345 2150
495 660
850 1490
281 492
570 998
1474 2472
4127 6600
5601 9072
2590 3792
3011 5280
5601 9072

0.102 0.110 decreased CO IS UNABLE TO COVERT ITS ASSET INTO SALES

0.387 0.404 decreased
2.717 3.258 decreased DUPONT 5 FACTOR IS NEEDED
0.737 0.728 increased
0.070 0.091 increased QUANTUM AND Quality of ROE

b/s stratagy problem

INHOUSE- HIGH FIED COST

2044 3470 increased

for a real assets co, it is not

advisable to HAVE DEBT
OVERT ITS ASSET INTO SALES

ality of ROE
case: Cryogenics plant property equipment( ppp)= capex= investment in fixed assets
revenue
No PAT depr
EBIT 200 140

year grow Revenue tax EBIT EBIT(1-TAX RATE) capex=capital expenditure

1 25% 1250 30% 250 175 312.5
2 25% 1562.5 30% 312.5 218.75 390.625
3 25% 1953.125 30% 390.625 273.4375 488.28125
4 25% 2441.406 30% 488.28125 341.796875 610.3515625
5 20% 3027.344 30% 585.9375 410.15625 732.421875
6 15% 3701.172 30% 673.828125 471.6796875 842.28515625
7 10% 4442.383 30% 741.2109375 518.84765625 926.513671875

WACC % OF DEBT* POST TAX COST OF DEBT

WACC FOR HIGH GROWTH = WACC FOR TRANSITION

DEBT RATION 50 RATION IS GIVEN 1:1 RF+BETA(RM-RF)

PRETAX 12%
POST TAX 8.4 BETA
EQUITY % 50 RF
RISK FREE % 8% RM
RISK PREMIUM 6% PREMIUM
BETA 1.27 COE

WACC % OF DEBT* POST TAX COST OF + % OF EQUITY*COST OF LIQUIDITY

WACC FOR STABLE GROWTH

EQUITY BETA 1.217

BETA 1.217
DEBT % 0.333333 RF 8%
PRE TAX COST OF DEB 12% RM 14%
COST OF DEBT 0.028 COE 15.30200%

EQUITY % 0.666667 RATIO IS GIVEN 1:2

RISK FREE RATE 8%
MKT RISK PREMIUM 6%
COST OF EQUTIY 0.102013

WACC 13.00%
 TOTAL VALUE OF THE FIRM
PV OF HIGH GROWTH PERIOD 212.138 WACC FOR THE STABLE GROWTH
PV OF TRANSITION PERIOD 273.237 % OF GROWTH DURING STABLE GROWTH
TERMINAL VALUE OR CONTINUING VALU 8396.660
PV OF TV 3798.223
fcff of 7th year *(1+growth rate)/wacc-g

TOTAL VALUE OF FI 4283.597

apex= investment in fixed assets
1000 capex is not cumulative as for this problem. This year 250 next
190 on evry year 20% revenue, wc is float money that is u cn have w
an increase in working capital, is a cash outflow, a decrease is c

Depr & amortisatNO PAT + DEPRECIATION WORKING CAP CHANGE IN FCFF WACC PVFCFF
237.5 412.5 250 -50 50 12 44.64286
296.875 515.625 312.5 -62.5 62.5 12 49.82462
371.09375 644.53125 390.625 -78.125 78.125 12 55.60783
463.8671875 805.6640625 488.28125 -97.65625 97.65625 12 62.06231
556.640625 966.796875 585.9375 -97.65625 136.7188 12 77.57789
640.13671875 1111.81640625 673.828125 -87.890625 181.6406 12 92.02479
704.150390625 1222.998046875 741.2109375 -67.382813 229.102 12 103.6339

+ % OF EQUITY*COST OF LIQUIDITY

= WACC FOR TRANSITION PERIOD

1.267 COD 50% 8.4

8% COE 50% 15.6
14% 100%
6%
15.60200% WACC 12

12.0001 12%

EQUITY 66.6666666667 15.30%

DEBT 33.3333333333 8.40%
100

WACC 13%
STABLE GROWTH 13%
DURING STABLE GROWTH 10%

12% is discounted rate for 7 years

s problem. This year 250 next 312 alone again, total is 390
float money that is u cn have wc, by adjusting. Wc is 20 that is difference btwen ca- cl is 20.
a cash outflow, a decrease is cash in flow. eg 5000 deposit

minimum 2000
tmrw min increased 2500
decreased -take it- inflow
 Nike

year 2002 2003 2004 2005 2006 2007 2008 2009

revenue 7 6.5 6.5 6.5 6 6 6 6

int exp 58.7 0.006186

rm 7.50% WACC
rf 5.39% it should be in lying between investment horizon of the investors
beta 0.8 nothing is mentioned about investment horizon, so go wi
rm- rf 5.9
coe rf+beta(rm-rf) 5.39%
10.11
kd

4.43% notes payable also interest bearing debt

58.7/435.9+5.4+835
beta is a systematic risk

2001 sh fund
debt
kd 2.8
 2010 2012
6 6

Kd Ke Rf beta Rm-Rf debt % equity %

the investors
vestment horizon, so go with longest that is 30 years

int rate paid by the co against interest bearing debt

for debt only interest bearing debt

3494.5

0.716%
 borrwed debt is 50: 50 assets @16.58% 470000
assets 940000
47000
47000

unlevered beta 1.5

rik free data 6%
risk premium 4%
16.58 post tax cost od debt 9.948
tax rate 40%
estimated beta 2.4

cost of equity 15.60%

estimated price since the entire earnings is paid as

wacc 50% of debtand 50% of equity
505.2

wacc for all ?? alculate

 pe ratio 8.174603

entire earnings is paid as dividend. Hence apply zero growth model

 valuation of YPF valuation of Repsol

Year FCFF WACC PV of FCFF Year FCFF

1999 490 12.5 435.5555556 1999 169
2000 415 12.5 327.9012346 2000 501
2001 502 12.5 352.5706447 2001 1174
2002 558 12.5 348.3566529 2002 1573
2003 748 12.5 415.0868601 2003 1560
1879.470948
Terminal Value 25917
Terminal value 9093 5045.969
Terminal value growth rate 4% total value of the firm
tax rate 34% debt
WACC 12.50% pref shares

No of shares
value of the firm 6925.44
less debt 3813
total equity 3112.44
no of shares 353
8.81711
valuation of Repsol

WACC PV of FCFF
0.08 156.336725
0.08 428.732432
0.08 929.375062
0.08 1151.92962
0.08 1056.80809
3723.18193
17557.2405

total value of the firm 21280.4225

5369
pref shares 775
15136.4225
No of shares 900 exhibit 14
16.8182472

9491