10% 1596 8% 77% 70% 10% 5% 4% 30% 40% 0 1 2 3 4 5 1100 1210 1331 1464 1000 -700 300 - 16 -770 330 -B47 363 -16 -932 399 -16 -1025 439 -16 1611 - 1127 483 -16 -16 3 3 3 3 3 3 -146 240 -100 187 -56 131 -107 210 -63 147 -170 256 -77 -125 225 -68 158 -63 95 -198 273 -82 191 179 -72 166 -67 101 -52 -59 -76 -72 108 79 88 114 AFC Ltd Sales growth Current assets/Sales Current liabilities/Sales Net fixed assets/Sales Costs of goods sold/Sales Depreciation rate Interest rate on debt Interest paid on cash and marketable securities Tax rate Dividend payout ratio Year Income statement Sales Costs of goods sold EBITDA Interest payments on debt Interest earned on cash and marketable securities Depreciation Profit before tax Taxes Profit after tax Dividends Retained earnings Balance sheet Cash and marketable securities Current assets Fixed assets At cost Depreciation Net fixed assets Total assets Current liabilities Debt Stock Accumulated retained earnings Total liabilities and equity Year Free cash flow calculation Profit after tax Add back depreciation Subtract increase in current assets Add back increase in current liabilities Subtract increase in fixed assets at cost Add back after-tax interest on debt Subtract after-tax interest on cash and mkt. securities Free cash flow Valuing the firm Weighted average cost of capital 80 84 165 86 182 86 200 82 220 73 242 150 1254 -407 847 1096 88 320 450 238 1096 1464 -532 932 1200 97 1070 -300 770 1000 80 320 450 150 1000 0 1704 -679 1025 1310 106 320 450 434 1977 -849 1127 1429 117 2287 -1047 1240 1555 129 320 320 320 450 333 1200 450 541 1429 450 656 1555 5 1310 1 2 3 179 147 107 158 12.5 170 -20 -15 -17 168 146 -18 10 -240 11 191 198 -22 12 -310 11 8 -184 11 9 -210 11 11 -273 11 -2 -2 -2 -2 -2 72 74 75 76 77 12% L Long-term free cash flow growth rate Number of Shares Question1 5% 1000 Using the information supplied calculate: 1. Enterprise Value 2. Equity Value 3 Price ner share