Calculate the Intrinsic Value of Your Company: PFIZER

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 - interpret THE BETA,

I did the WACC and is

	Range				Selected WACC
	Low	High	Conclusion		6,25%
Cost of Equity
Selected Beta	0,66	0,81	0,73
Market Risk Premium	4,2%	4,2%	4,2%
Risk-free Rate	3,0%	3,5%	3,3%
Additional Risk Adjustments	0,13%	0,25%	0,2%
Implied Cost of Equity	6,00%	7,25%	6,63%
Cost of Debt Inputs
Pre-tax Cost of Debt	4,0%	4,5%	4,3%
Tax Rate	15,0%	15,0%	15,0%
Debt % of Capital	10,0%	15,0%	12,5%
Implied Cost of Debt	3,40%	3,83%	3,61%
WACC Range	5,75%	6,75%	6,25%

Conduct a two-stage valuation you can now combine the two items above to estimate the 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.