Cedeno_Koerner_Melo_Vining_6.3 Group Project Swissgrid Deliverable 3_updated

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Module 6.3 Group Project – Swissgrid Deliverable 3 Daniela Cedeno, Greer Koerner, Marcel Melo, Thomas Vining Embry-Riddle Aeronautical University Worldwide November 27, 2022
Case 1 – Potential changes in government policy that decreases depreciation by 40% per year. Table: Cash Flow after the 40% decrease in depreciation Swiss grid Financial Summary 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Depreciation PPE 48.78 60.3 68.16 65.34 64.6 66.0 65.3 65.3 65.6 65.4 Amortization of intangible assets 23.4 18.8 18.1 35.3 24.1 25.8 28.4 26.1 26.8 27.1 Net Income 113.0 128.2 137.3 145.8 95.6 98.2 100.9 103.6 106.4 109.3 Cash flows* 185.2 207.3 223.6 246.4 184.3 190.1 194.6 195.0 198.7 201.8 Table: Cash flow before and after 40% decrease in depreciation Swiss grid Financial Summary 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cash flows (BEFORE) 185.2 207.3 223.6 246.4 227.4 234.1 238.2 238.6 242.4 245.4 Cash flows (AFTER) 185.2 207.3 223.6 246.4 184.3 190.1 194.6 195.0 198.7 201.8 **Talking Points: Regulatory risk that Swissgrid mentioned in study Include formula for cash flow and terminal value – end of 6 th year Talk changes Where was company value and now what is it based on changes o Baseline = 41,956.21 share price = 133.22 o Now = 34,500.59 with share price 109.53 o Company value decreases and so does share price Case 2 – Environmental issues and new projects that will result in future growth in gross profit. Table: cash flow after 4.2% increase Gross Profit Swiss grid Financial Summary 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Depreciation PPE 81.3 100.5 113.6 108.9 107.7 110.1 108.9 108.9 109.3 109.0 Amortization of intangible assets 23.4 18.8 18.1 35.3 24.1 25.8 28.4 26.1 26.8 27.1 Net Income 80.5 88.0 91.9 102.2 97.0 101.1 105.4 109.8 114.4 119.2 Cash flows* 185.2 207.3 223.6 246.4 228.8 237.0 242.6 244.8 250.4 255.3 Table: Comparison cash flow baseline and after 4.2% increase Gross Profit Swiss grid Financial Summary 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cash flows* (BEFORE) 185.2 207.3 223.6 246.4 227.4 234.1 238.2 238.6 242.4 245.4 Cash flows* (AFTER) 185.2 207.3 223.6 246.4 228.8 237.0 242.6 244.8 250.4 255.3
Table: Change in gross profits (baseline to 75% prob 4.2% growth) Swiss grid Financial Summary 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Gross Profit (BEFORE) 477.1 486.8 498.9 517.4 531.4 545.7 560.5 575.6 591.1 607.1 Gross Profit (AFTER) 477.1 486.8 498.9 517.4 539.1 561.8 585.4 610.0 635.6 662.3 Talking points 75% prob and 4.2% gross profit increase of the 3 scenarios What environmental issues from case study could include Include formula cash flow and terminal value – 6 th year What did company value start with and what is now Company Value Share Price Baseline $41,965.21 $133.22 Low $42,451,16 $134.77 Mid $43,009.22 $136.54 High $43,580.83 $138.35
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4 References Kaplan, R. S., & Mikes, A. (November 2018). Swissgrid: Enterprise Risk Management in a Digital Age. Harvard Business School Case , 119-045. Segal, S. (2011). Corporate value of enterprise risk management: The next step in business management. John Wiley & Sons, Incorporated.