28 29 Cash 30 Accounts Receivable 31 Inventory 32 Accounts Payable 33 Short-Term Debt- 34 35 CapEx 36 37 a. Value of Research Asset 38 Amortization life 39 Year 40 current 41 42 43 44 49 -Depreciation 50 EBIT -1 -2 -3 45 Value of research asset = 46 i 47 b. Corrected operating income 48 EBITDA 51 + Current year's R&D 52 - Amortization of R&D Last Year 53 Adj EBIT 54 55 EBIT x (1-Tax rate) 56+ Current year's R&D 57- Amortization of R&D 58 Adj EBIT (1-Tax rate) 59 R&D 60 c. Free Cashflow to the Firm 61 EBIT x (1-Tax rate) 62 - Net cap Ex 63 - Change in non-cash WC $100 $80 $150 $130 $150 $200 3 years $100 $90 $75 $60 $350 ($100) Year Before $80 $90 $100 $110 $130 Amortization this year Remaining V- 28 29 Cash 30 Accounts Receivable 31 Inventory 32 Accounts Payable 33 Short-Term Debt- 34 35 CapEx 36 37 a. Value of Research Asset 38 Amortization life 39 Year 40 current 41 42 43 44 49 -Depreciation 50 EBIT -1 -2 -3 45 Value of research asset = 46 i 47 b. Corrected operating income 48 EBITDA 51 + Current year's R&D 52 - Amortization of R&D Last Year 53 Adj EBIT 54 55 EBIT x (1-Tax rate) 56+ Current year's R&D 57- Amortization of R&D 58 Adj EBIT (1-Tax rate) 59 R&D 60 c. Free Cashflow to the Firm 61 EBIT x (1-Tax rate) 62 - Net cap Ex 63 - Change in non-cash WC $100 $80 $150 $130 $150 $200 3 years $100 $90 $75 $60 $350 ($100) Year Before $80 $90 $100 $110 $130 Amortization this year Remaining V