Based on the information provided in the MSFT Info and MSFT Cash Flow sheets (June values are reflective of the previous December values. i.e. June 2021 Cash Flows are for the 2020 year.): a Calculate the WACC of MSFT: For this use the single-factor CAPM to estimate the cost of equity per year. Use the 5-year monthly Beta that is given in the MSFT info sheet. The market portfolio returns and risk-free rate data is available in FF_Factors_FromKennethFrenchWeb. Calculate the cost of debt for MSFT per year. Use the information of the most recent issued long-term bond of MSFT, reported in the MSFT Info sheet. Assume MSFT's effective tax rate is 15%. b. Forecast Future Cash Flow: For this, first, find Free Cash Flows (from Operation) of Microsoft Inc. (MSFT) for each year (from December 2001 to December 2020). Free Cash Flow is Cash from Operations minus Capital Expenditure. Then based on these historical FCF, calculate the median of FCF growth rates in two cases: in the last 5 years (short-term rate) and in the last 20 years (long-term rate). Lastly, forecast future values of the FCF of Microsoft. Assume FCF will grow at the short-term rate for the next 5 years, and at the long-term rate after year 5 forever. C. Calculate the Enterprise Value and Price Per Share of MSFT. d. What is your purchase recommendation? 333.1 Market Cap (mm) 2,500,908.30 7,508.00 Stock Quote and Chart (Currency: USD) Last (Delayed) Open Previous Close Change on Day Change % on Day 99.90% 40.9 0.70% Day High/Low 334.41 Shares Out. (mm) 333.1 Float% -1.87 Shares Sold Short (mm) -0.60% Dividend Yield % % 336.49/ Diluted EPS Excl. Extra Items 332.12 349.677 P/Diluted EPS Before Extra 209.11 22.21 Avg 3M Dly Vim (mm) 0.87 8.94 52 wk High/Low 37.26x 25.55 Volume (mm) Beta 5Y Delayed Quote**|Last Updated on Dec-09-2021 12:00 AM (GMT-5) NasdaqGS:MSFT - Common Stock 13.9x EBITDA 27.8x Financial Information (Currency: USD, in mm) Total Revenue 176,251.00 Market Capitalization 2,500,908.30 TEV/Total Revenue 85,745.00 Total Enterprise Value 2,449,259.30 TEV/EBITDA EBIT 74,278.00 Cash & ST Invst. 130,584.00 P/Diluted EPS Before Extra Net Income 67,883.00 Total Debt 78,935.00 Price/Tang BV Capital Expenditure -21,525.00 Total Assets 335,418.00 Total Debt/EBITDA Currency in USD in mm, LTM as of Sep-30-2021 TEV and Market Cap are calculated using a close price as of Dec-09-2021 37.3x 26.7x 0.9x Latest Issued Securities Maturity Date Issuer Coupon S&P Rating Current Price Interest First Last Frequency Coupon Coupon Date Date Semi-Annual Dec-01-2020 Dec-01-2049 Jun-01-2050 2.525 97.829 AAA Microsoft Corporation (NasdaqGS:M SFT) Carl Fleu cal Perid Ending 12 sth 12 - --30-2005 ---3.-2 12th 12. the enth 12 - the --36-24 12 anth 2 author -30-2012 " Het lees. 8,168.0 14,065. 16,978.0 21,863.0 14.64 16 Gerduillon datangiblue 118.00 464.0 420 2301 17.401.0 472 1,872. 558.0 Depreciation #Azert.. Tuto 210.0 2,424.0 380.0 (1,296.0 (527.03 3.784.0 5.734 (270.0) 1.715.0 (90) (2,071.0) 3,749.6 ....! 1,596. 2.406.0 (209.0) 1.100 16.870 (120.0) (1,569.0 ... 22440 (93.0) ** 164.0 (1,243.0 Gain) Lar On Sale Of Invert Stock-Bered Compensation Tax Benefit from Stock Optio Change In Inventorier Change in Add. Payabl Change in Ind. Taxer hande in Other Net Operating Arret (1807 (802.0 2,223.0 1,227.6 1382 1315. 2.650.. 1,417. 803.0 (866.0 $24.0 $97.0 (770.0) ($91.03 (1,109.03 (3,182.0 (2,305.0) Capital Expenditur institut Invart. in Markotable Equity Securt. (4,257.0) *** (17,802.0) (10,075.0 (5,541.0) (2,229.0) 16,046. 7103. 4,8740 (11,975.0 Cukfru-Isvarting (10,845.6 (127.0 (3,342.6 15,027.0 0326.00 04.03 103 4,393.0 (1,326.03 Total Debt Repaid 16.06.09 30 67.995.00 Total Dividende Puid Special Dividend Culfrun Financing 195.0 Foreign Exchant Rate Adi 43.0 Supplertalen Car Interpold . Unlovered Free Carh Flow 15.6%. Filing Date 29 RES REF 67 SEP SEP REP $ Based on the information provided in the MSFT Info and MSFT Cash Flow sheets (June values are reflective of the previous December values. i.e. June 2021 Cash Flows are for the 2020 year.): a Calculate the WACC of MSFT: For this use the single-factor CAPM to estimate the cost of equity per year. Use the 5-year monthly Beta that is given in the MSFT info sheet. The market portfolio returns and risk-free rate data is available in FF_Factors_FromKennethFrenchWeb. Calculate the cost of debt for MSFT per year. Use the information of the most recent issued long-term bond of MSFT, reported in the MSFT Info sheet. Assume MSFT's effective tax rate is 15%. b. Forecast Future Cash Flow: For this, first, find Free Cash Flows (from Operation) of Microsoft Inc. (MSFT) for each year (from December 2001 to December 2020). Free Cash Flow is Cash from Operations minus Capital Expenditure. Then based on these historical FCF, calculate the median of FCF growth rates in two cases: in the last 5 years (short-term rate) and in the last 20 years (long-term rate). Lastly, forecast future values of the FCF of Microsoft. Assume FCF will grow at the short-term rate for the next 5 years, and at the long-term rate after year 5 forever. C. Calculate the Enterprise Value and Price Per Share of MSFT. d. What is your purchase recommendation? 333.1 Market Cap (mm) 2,500,908.30 7,508.00 Stock Quote and Chart (Currency: USD) Last (Delayed) Open Previous Close Change on Day Change % on Day 99.90% 40.9 0.70% Day High/Low 334.41 Shares Out. (mm) 333.1 Float% -1.87 Shares Sold Short (mm) -0.60% Dividend Yield % % 336.49/ Diluted EPS Excl. Extra Items 332.12 349.677 P/Diluted EPS Before Extra 209.11 22.21 Avg 3M Dly Vim (mm) 0.87 8.94 52 wk High/Low 37.26x 25.55 Volume (mm) Beta 5Y Delayed Quote**|Last Updated on Dec-09-2021 12:00 AM (GMT-5) NasdaqGS:MSFT - Common Stock 13.9x EBITDA 27.8x Financial Information (Currency: USD, in mm) Total Revenue 176,251.00 Market Capitalization 2,500,908.30 TEV/Total Revenue 85,745.00 Total Enterprise Value 2,449,259.30 TEV/EBITDA EBIT 74,278.00 Cash & ST Invst. 130,584.00 P/Diluted EPS Before Extra Net Income 67,883.00 Total Debt 78,935.00 Price/Tang BV Capital Expenditure -21,525.00 Total Assets 335,418.00 Total Debt/EBITDA Currency in USD in mm, LTM as of Sep-30-2021 TEV and Market Cap are calculated using a close price as of Dec-09-2021 37.3x 26.7x 0.9x Latest Issued Securities Maturity Date Issuer Coupon S&P Rating Current Price Interest First Last Frequency Coupon Coupon Date Date Semi-Annual Dec-01-2020 Dec-01-2049 Jun-01-2050 2.525 97.829 AAA Microsoft Corporation (NasdaqGS:M SFT) Carl Fleu cal Perid Ending 12 sth 12 - --30-2005 ---3.-2 12th 12. the enth 12 - the --36-24 12 anth 2 author -30-2012 " Het lees. 8,168.0 14,065. 16,978.0 21,863.0 14.64 16 Gerduillon datangiblue 118.00 464.0 420 2301 17.401.0 472 1,872. 558.0 Depreciation #Azert.. Tuto 210.0 2,424.0 380.0 (1,296.0 (527.03 3.784.0 5.734 (270.0) 1.715.0 (90) (2,071.0) 3,749.6 ....! 1,596. 2.406.0 (209.0) 1.100 16.870 (120.0) (1,569.0 ... 22440 (93.0) ** 164.0 (1,243.0 Gain) Lar On Sale Of Invert Stock-Bered Compensation Tax Benefit from Stock Optio Change In Inventorier Change in Add. Payabl Change in Ind. Taxer hande in Other Net Operating Arret (1807 (802.0 2,223.0 1,227.6 1382 1315. 2.650.. 1,417. 803.0 (866.0 $24.0 $97.0 (770.0) ($91.03 (1,109.03 (3,182.0 (2,305.0) Capital Expenditur institut Invart. in Markotable Equity Securt. (4,257.0) *** (17,802.0) (10,075.0 (5,541.0) (2,229.0) 16,046. 7103. 4,8740 (11,975.0 Cukfru-Isvarting (10,845.6 (127.0 (3,342.6 15,027.0 0326.00 04.03 103 4,393.0 (1,326.03 Total Debt Repaid 16.06.09 30 67.995.00 Total Dividende Puid Special Dividend Culfrun Financing 195.0 Foreign Exchant Rate Adi 43.0 Supplertalen Car Interpold . Unlovered Free Carh Flow 15.6%. Filing Date 29 RES REF 67 SEP SEP REP $