21
Valuing the Expansion 20. Forecast KMS's free cash flows (reproduce Table 18.13), assuming KMS's market share will increase by 0.25% per year; investment, financing, and depreciation will be adjusted accordingly; and working capital will be as you projected in Problem 15). 21. Calculate the continuation value of KMS using your reproduction of Table 18.8 from Problem 14, and assuming an EBITDA multiple of 8.5. X The information we have calculated so far can be used to project KMS's balance sheet and statement of cash flows through 2018. While these statements are not critical for our valuation of the expansion, they often prove helpful in providing a more complete picture of how a firm will grow during the forecast period. These statements for KMS are shown in the spreadsheets in Tables 18.17 and 18.18. 2013 2014 2015 2016 2017 2018 -17 lance KMS -2018 1 Year 2 Balance Sheets (5000s) 3 Assets 4 Cash and Cash Equivalents 5 Accounts Receivable 6 Inventories 7 Total Current Assets 8 Property, plant, and Equipment 9 Total Assets 10 11 Liabilities 12 Accounts Payable 13 Debt 14 Total Liabilities 11.982 14,229 14,978 41.189 49,427 90,616 14,139 16,520 19,157 22,107 25 357 16,790 19,617 22.761 25.252 30.124 17,674 20.649 23,959 27.633 31.709 48.603 56,786 65,886 75,992 87 201 66.984 67.486 67.937 68,344 68.709 115,587 124,272 133,823 144,335 155,910 11.982 4,500 16,482 14,139 24.500 38.639 16.520 24,500 41.020 19.167 24,500 43.667 22.107 24,500 46,607 25,367 24,500 49.867 16 Stockholders' Equity 17 Starting Stockholders' Equity 18 Net Income 19 Dividends 20 Stockholders' Equity 21 Total Liabilities and Equity 69.275 74.134 76.948 83,252 90.156 97.729 6.940 7.6008807 11,141 13.739 16.627 -2,082 -4,786 -2.503 -4,237 -6,167 -8,313 74.134 76.948 83,252 90.156 97.729 106,042 90.616 115,587 124,272 133,823 144,335 155 910 2013 2014 2015 2016 2017 2018 3.18 ement KMS -2018 7.600 7,443 8 807 7.498 11,141 7.549 13,739 7,594 16,627 7,634 1 Year 2 Statement of Cash Flows (5000s) 3 Net Income 4 Depreciation 5 Changes in Working Capital 6 Accounts Receivable 7 Inventory 8 Accounts Payable 9 Cash from Operating Activities 10 Capital Expenditures 11 Other Investment 12 Cash from Investing Activities 13 Net Borrowing 14 Dividends 15 Cash from Financing Activities -2.561 - 2,696 2,157 11.942 - 25,000 -2.827 -2.976 2,381 12,884 -8.000 -3.144 -3.309 2.647 14.894 -8.000 -3.491 -3,675 2,940 17.107 -8.000 -3.872 -4,076 3.261 19,574 -8.000 -8.000 -8.000 -8.000 - 25,000 -8.000 20,000 -4.786 -2.503 15.214 -2.503 -4,237 -6,167 -8,313 -4,237 -6,167 -8,313 16 2,157 2,381 2,647 2.940 3.261 17 Change in Cash (9+12+15)
