Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total Debt 25,000 25,000 25,000 25,000 25,000 25,000 EBITDA 4,500 4,800 5,200 6,000 6,500 7,200 Free Cash Flow before Debt Service (1,250) (2,500) 1,550 2,450 3,250 3,650 4,250 Net Equity Cash Flows 300 1,200 2,000 2,400 3,000 Expected Equity Return 20% Exit Year Year 5 Terminal Value 1. EBITDA Multiple 8.0x 2. Perputity Method (use Next Year's Cash Flow) WACC 10.0% Growth Rate 5.0% OUTPUT CASH FLOW PROJECTIONS FOR DCF 1 4 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Equity Cash Flows Terminal Value (Exit Year) 1. EBITDA Multiple 2. Perputity Method (use Next Year's Cash Flow) Average Debt Equity TV Equity Cash Flows+TV Net Present Value IRR
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total Debt 25,000 25,000 25,000 25,000 25,000 25,000 EBITDA 4,500 4,800 5,200 6,000 6,500 7,200 Free Cash Flow before Debt Service (1,250) (2,500) 1,550 2,450 3,250 3,650 4,250 Net Equity Cash Flows 300 1,200 2,000 2,400 3,000 Expected Equity Return 20% Exit Year Year 5 Terminal Value 1. EBITDA Multiple 8.0x 2. Perputity Method (use Next Year's Cash Flow) WACC 10.0% Growth Rate 5.0% OUTPUT CASH FLOW PROJECTIONS FOR DCF 1 4 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Equity Cash Flows Terminal Value (Exit Year) 1. EBITDA Multiple 2. Perputity Method (use Next Year's Cash Flow) Average Debt Equity TV Equity Cash Flows+TV Net Present Value IRR
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Total Debt
25,000
25,000
25,000
25,000
25,000
25,000
EBITDA
4,500
4,800
5,200
6,000
6,500
7,200
Free Cash Flow before Debt Service
(1,250)
(2,500)
1,550
2,450
3,250
3,650
4,250
Net Equity Cash Flows
300
1,200
2,000
2,400
3,000
Expected Equity Return
20%
Exit Year
Year 5
Terminal Value
1. EBITDA Multiple
8.0x
2. Perputity Method (use Next Year's Cash Flow)
WACC
10.0%
Growth Rate
5.0%
OUTPUT
CASH FLOW PROJECTIONS FOR DCF
1
2
3
4
5
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Equity Cash Flows
Terminal Value (Exit Year)
1. EBITDA Multiple
2. Perputity Method (use Next Year's Cash Flow)
Average
Debt
Equity TV
Equity Cash Flows + TV
Net Present Value
IRR
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