Calculate the Intrinsic Value of Your Company: CVS Health (Info Below) You will use the two-stage company-level Discounted Cash Flow (DCF) valuation model to calculate the intrinsic value of your chosen company.

Calculate the Free Cash Flow based on most recent fiscal year data:

Estimate the free cash flows (FCF) available to the firm. To do this you can use the below formula:

FCF = Cash Flow from Operations - Capital Expenditures + Interest * (1 - Tax Rate)

The "Cash Flow from Operations" and "Capital Expenditures" can be found on the Statement of Cash Flows in Yahoo! Finance.

The Interest expense (if any exists) is on the Income Statement.

The Tax Rate can be calculated based on the Tax Expense and Net income (as was performed in the first course project).

For additional details on these calculations please refer to this external resource.

Specify the WACC

For the discount value you should use the weighted average cost of capital (WACC). You can either use the value you calculated from the prior course project assignment or you can use the value generated by the website www.thatswacc.com.

Conduct a two-stage valuationYou can now combine the two items above to estimate a present value of the firm. You should calculate a high-growth phase value and a terminal value.

High Growth Phase Value: For this phase, assume that in years 1 - 3 the Free Cash Flows are growing by 8% annually.

Terminal Value: For this phase assume the FCF grow at a constant growth rate of 2.5%.

Calculate the present values of the above phases and add them together for the total present value of the company.

Cash Flow

All numbers in thousands

Period Ending	12/31/2017	12/31/2016	12/31/2015	12/31/2014
Net Income	6,622,000	5,317,000	5,237,000	4,644,000
Operating Activities, Cash Flows Provided By or Used In
Depreciation	2,479,000	2,475,000	2,092,000	1,931,000
Adjustments To Net Income	-678,000	1,020,000	-34,000	628,000
Changes In Accounts Receivables	-941,000	-243,000	-1,594,000	-737,000
Changes In Liabilities	1,710,000	2,189,000	2,834,000	1,742,000
Changes In Inventories	-514,000	-742,000	-1,141,000	-770,000
Changes In Other Operating Activities	-671,000	125,000	1,145,000	699,000
Total Cash Flow From Operating Activities	8,007,000	10,141,000	8,539,000	8,137,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures	-1,918,000	-2,224,000	-2,367,000	-2,136,000
Investments	-25,000	26,000	-24,000	4,000
Other Cash flows from Investing Activities	265,000	230,000	411,000	515,000
Total Cash Flows From Investing Activities	-2,932,000	-2,470,000	-13,420,000	-4,045,000
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid	-2,049,000	-1,840,000	-1,576,000	-1,288,000
Sale Purchase of Stock	329,000	296,000	362,000	421,000
Net Borrowings	-598,000	-614,000	11,218,000	-932,000
Other Cash Flows from Financing Activities	-72,000	-142,000	-124,000	106,000
Total Cash Flows From Financing Activities	-6,751,000	-6,761,000	4,879,000	-5,694,000
Effect Of Exchange Rate Changes	1,000	2,000	-20,000	-6,000
Change In Cash and Cash Equivalents	-1,675,000	912,000	-22,000	-1,608,000