Reeby Sport
Submitted by: Submitted by peterriise
Views: 168
Words: 764
Pages: 4
Category: Business and Industry
Date Submitted: 09/11/2013 02:42 AM
Reeby
Sports
-‐
Questions
Use
Tables
3
and
4
to
forecast
free
cash
flow
for
Reeby
Sports
from
2004
to
2010.
What
is
the
present
value
of
these
cash
flows
in
2003,
including
PV(terminal
value)
in
2010?
Free
Cash
Flow
2004
2005
2006
2007
2008
2009
2010
2011
=
After-‐tax
profits
5,25
5,70
3,00
3,40
4,35
6,00
7,61
7,60
+
Depreciation
2,40
3,10
3,12
3,17
3,26
3,44
3,68
3,94
-‐
CapEx
4,26
10,50
3,34
3,65
4,18
5,37
6,28
8,50
-‐
Inc.
In
NWC
1,39
0,60
0,28
0,42
0,93
1,57
2,00
FCF
2,00
-‐2,30
2,50
2,50
2,50
2,50
3,01
3,04
Terminal
108,53
NPV(FCF
2004-‐2010)
PV(Terminal)
PV(Total)
8,01
55,69
63,70
Annual growth rate g is given by following relationship ������ = ������! ∙ (1 − ������) ������ = 0,12 ∙ 1 − 0,40 = 7,2% The terminal value is given by ������ = ������ = ������������������!!! ������! − ������
3,04 = 108,53 0,10 − 0,072
This must be discounted to t = 2003, and will be the PV(Terminal) found above. ������������ ������������������������������������������������ = 108,53 = 55,69 (1 + 0,10)!
The 2011 After-tax profit is 12% of the start-of-the-year book equity. The depreciation is calculated as a 7,2% growth of the 2010 year depreciation and the CapEx is depreciation + 60% of the profits (1-dividend). This gives us the FCF used in the terminal value calculation. REEBY
SPORT
1
A more conservative valuation, as a consequence of more competition in the market, will be based on a scenario...
