Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|} hline multicolumn{13}{|c|}{ Olscounted cash flow valuation with terminal growth rate } hline 2 & & & & (5in milli & as, exce &

image text in transcribed
image text in transcribed
\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{13}{|c|}{ Olscounted cash flow valuation with terminal growth rate } \\ \hline 2 & & & & (5in milli & as, exce & persh & & & & & & 2 \\ \hline 3 & & & & & & & & & 18 & & & \\ \hline 5 & Amszon equity beta & 1.5 & & & & & & & & & & \\ \hline 6 & Market risk premlum & 5.00% & & & & & & & 1021 & 17 & & \\ \hline 7 & 10-year Treasury 1 Ian 2020 & 1.900 & & & & & & & & & & \\ \hline 8 & Cost of equity & & & & & & & & & & & \\ \hline 9 & Cost of debt & 2.006 & & & & & & & & & & i \\ \hline 10 & Shares outstanding 31 Dec 2019 & 504 & million & & & & & & & & & \\ \hline 11 & Debt/ (debt + equity) & 2.60% & & & & & & & & & & \\ \hline 12 & Taxrate & 17.085 & & & & & & & & & & \\ \hline 13 & Discount rate (WACC) & & & & & & & & & 87 & & \\ \hline 14 & Growth rate & & & & & & & & & -1 & & \\ \hline 15 & & 7 & & & & & & & & - & & \\ \hline 16 & & & & & & & & & & & & \\ \hline 17 & & 3 & & & & & & & & & & \\ \hline 18 & & 2019 & 2020 & 2021 & 2022 & 2023 & 2024 & 2025 & 2026 & 2027 & 2028 & 2029 \\ \hline 19 & & & & & & & E & & & & & % \\ \hline 20 & Operating revenue & 280,522 & & & & & & & +1 & & - & 8 \\ \hline 21 & Operating expenses & -265.981 & & & & & 4 & & & & 1 & \\ \hline 22 & Operating income & 14,541 & & & & & II & & E & & T & \\ \hline 23 & Taxes & -2.470 & & & & & 11 & & 4 & & E & \\ \hline 24 & & 12,071 & & & & & (1) & & E & & E- & E \\ \hline 25 & Depreciation & 21,789 & & & & & & & & & & \\ \hline 26 & NWC investment & 7,617 & & & & & 7 & & & & 18 & \\ \hline 27 & Capital emenditures & -12.689 & & & & & & & & & & \\ \hline 28 & Free cash flow & 28,788 & & & 4 & & a & - & & & & E \\ \hline 29 & & & & & if & H & 17 & & & & Eas & \\ \hline 30 & Discounted free cash flow & & & & 1 & & & & & +1 & 2= & \\ \hline 31 & PV 2020 to 2029 & & & & 31 & & & 3 & & & & \\ \hline 32 & Terminal value & & & & & 7 & F & 7 & & E & & \\ \hline 33 & Enterprise value & 37 & & & & & & & & Z & 20 & \\ \hline 34 & Debt & & & & & & & Es & 4 & E & 28 & \\ \hline 35 & Equity value & 21 & 7 & & & 7 & 87 & EI & Ex & In & & \\ \hline 36 & & & & & & & & & & & & 4 \\ \hline 37 & Value per share & 12 & & & & & & & & & & \\ \hline 39 & 1 & 1 & & & & & & & +2 & & & \\ \hline \end{tabular} The goal is to provide a valuation of Amazon.com stock as of January 1,2020. Instructions 1) Use the Excel template and the data provided in it. 2) Fill in the missing data with your own estimates and calculations. 3) The projected annual growth rates should start relatively high (e.g., at Amazon's current growth rate) and then decline over time to a level that is sustainable in the long term. 4) You can add additional sheets for calculations to avoid clutter. 5) There is no one correct answer because a large range of assumptions should be reasonable. Yet, please compare your valuation to Amazon's current share price (or its price on January 1, 2020) to get a sense of how your valuation relates to the stock market's assessment of Amazon's value. 6) The template provides the actual cash flows for 2019 , the prior year. Explicitly forecast the cash flows for the next 10 years (2020 to 2029). Account for the present value of the cash flows for 2030 and beyond with a terminal value. 7) Assume Amazon's debt as of January 1,2020 is $24.82 billion. 8) You can make any changes to the template that you desire

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Making Of Finance

Authors: Isabelle Chambost, Marc Lenglet, Yamina Tadjeddine

1st Edition

1138498572, 978-1138498570

More Books

Students also viewed these Finance questions

Question

b. Where did they come from?

Answered: 1 week ago

Question

c. What were the reasons for their move? Did they come voluntarily?

Answered: 1 week ago

Question

5. How do economic situations affect intergroup relations?

Answered: 1 week ago