Free Cash Flow Valuation Model

INPUTS $($In millions$)$ Year

Current Projected

$01234$

Free cash flow $-$$$25\mathrm{.}0$ $$25\mathrm{.}0$ $$90\mathrm{.}0$ $$97\mathrm{.}2$

Marketable securities $$60$

Notes payable $$160$

Long$-$term bonds $$640$

Preferred stock $$80$

WACC $12\mathrm{.}00\%$

Number of shares of stock $25$

a$.$ Calculating the estimated horizon value $($i$.$e$.,$ the value of operations at the end of the forecast

period immediately after the Year$-4$ free cash flow$)$ Formulas

Constant long$-$term growth rate #N$/$A

Horizon value at Year $4$ million #N$/$A

b$.$ Calculating the present value of the horizon value, the present value of the free cash flows,

and the estimated Year$-0$ value of operations

Present value of HV million #N$/$A

Present value of FCF million #N$/$A

Value of operations million #N$/$A

$.$ Calculating the estimated Year$-0$ price per share of common equity

Value of operations million #N$/$A

$+$ Value of marketable securities million #N$/$A

Total intrinsic value million #N$/$A

$-$ Value of total debt million #N$/$A

$-$ Value of preferred stock million #N$/$A

Intrinsic value of equity million #N$/$A

$-$: Number of shares million #N$/$A

Intrinsic stock price #N$/$AFree Cash Flow Valuation Model

INPUTS $($In millions$)$

a$.$ Calculating the estimated horizon value $($i$.$e$.,$ the value of operations at the end of the forecast

period immediately after the Year$-4$ free cash flow$)$

Constant long$-$term growth rate

Horizon value at Year $4$

b$.$ Calculating the present value of the horizon value, the present value

and the estimated Year$-0$ value of operations

Present value of HV

Present value of FCF

Value of operations

c$.$ Calculation the estimated Year$-0$ price per share of common equity

Value of operations

Value of marketable securities

million

Total intrinsic value

Value of total debt

Value of preferred stock

million

Intrinsic value of equity

million

million

million

$$ Number of shares

million

Intrinsic stock price

million