Finance- You are valuing a firm using a two-stage DCF valuation model

| January 30, 2017

Question
Year 0 Year 1 Year 2 Year 3 Year 4
NOPAT 100 115 132.25 138.598 145.2507
b 0.50 0.50 0.50 0.40 0.4
New Investment 50 57.5 66.125 55.4392 58.1003
FCFF 50 57.5 66.125 83.1588 87.1504
IC 500 557.5 623.625 679.0642 737.1645
ROIC 0.2300 0.2372 0.2222 0.2139
EVA 55.00 65.35 63.763
ROI 0.3000 0.3450 0.1587
WACC 12%
a)
FCFF Model
Vop = 57.5 + 1 X 83.1588 = 1082.574
1+12% 1+12% 12%-4.8%
51.33929 0.892857 1154.983
EVA Model
Vop = 500 + 55 + 63.763 X 1 = 1023.534
1+12% 12% 1+12%
500 49.10714 531.3583 0.892857
b)

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