Discounted Cash Flow Valuation

1. conduct a discounted cash flow valuation based on table 1 values

2. The analysis should explain each variable used in the analysis, why you accepted the given input, or how and why you changed a variable.

3. The analysis should also examine the relevant cash flows, compare the final valuation to the stocks current price and explain any differences. (Note: Remember to adjust the equity risk premium to between 5% and 6%; also, adjust the growth rate to an appropriate long-term growth rate.)

Table 1

Assumptions for ValuePro.net Valuation

Company Name - Apple (AAPL)

	ValuePro.net Assumptions	Your Assumptions	Explain the Reasoning for Your Assumptions
Excess Return Period (Years) (10 years is appropriate)	10
Revenues ($ mil) (From Income Statement)	169104
Growth Rate (%) (Estimated Annual Growth Rate in Earnings in Future)	14.5
Net Operating Profit Margin (%) (EBIT from Income Statement)	35.63
Tax Rate (%) (From Income Statement: Taxes / Earnings Before Taxes)	25.16
Stock Price ($) (Current Price per Share)	109.9
Shares of Stock Outstanding (mil.) (Be careful with decimal)	940.1
10 Yr. Treasury Bond Yield (%)	5
Bond Spread to Treasury (%) (1.5 is appropriate)	1.5
Preferred Stock Yield (%)	7.5
Depreciation Rate (%) (Percentage of Revenue; Calculate)	2.09
Investment Rate (%) (Percentage of Revenue for Capital Expenditures - Calculate)	5.3
Working Capital (%) (Percentage of Revenue WC is Current Assets; Calculate)	-6.04
Short Term Assets ($ mil.) (Current Assets from Balance Sheet)	63337
Short-Term Liabilities ($ mil.) (Current Liabilities from Balance Sheet)	39913
Equity Risk Premium % (Should be between 5% and 6%)	3
Company Beta for Stock (Number) (Look up Beta)	1.05
Value (Book) of Debt Outstanding ($ mil.) (L-T + S-T Debt from Balance Sheet)	0
Value Preferred Stock Outstanding ($ mil)	0
Company WACC (%) (Look up or Calculate)	8.15

Table 1

Assumptions for ValuePro.net Valuation

Company Name - McCormick & Co. (MKC)

	ValuePro.net Assumptions	Your Assumptions	Explain the Reasoning for Your Assumptions
Excess Return Period (Years) (10 years is appropriate)	10
Revenues ($ mil) (From Income Statement)	4060.5
Growth Rate (%) (Estimated Annual Growth Rate in Earnings in Future)	10
Net Operating Profit Margin (%) (EBIT from Income Statement)	26.573
Tax Rate (%) (From Income Statement: Taxes / Earnings Before Taxes)	23.50
Stock Price ($) (Current Price per Share)	94.04
Shares of Stock Outstanding (mil.) (Be careful with decimal)	132
10 Yr. Treasury Bond Yield (%)	2.00
Bond Spread to Treasury (%) (1.5 is appropriate)
Preferred Stock Yield (%)	0
Depreciation Rate (%) (Percentage of Revenue; Calculate)	2.56
Investment Rate (%) (Percentage of Revenue for Capital Expenditures - Calculate)	2.75
Working Capital (%) (Percentage of Revenue WC is Current Assets; Calculate)	17.57
Short Term Assets ($ mil.) (Current Assets from Balance Sheet)	1217.5
Short-Term Liabilities ($ mil.) (Current Liabilities from Balance Sheet)	1250.5