Good day! Can you help with the attached question?

DCF Valuation and EVA/MVA Analysis Using the company that was selected for the class, there are two parts to this assignment: 1. DCF Company Valuation - Prepare a DCF Valuation of the selected company using the eVal model and the projections developed in Week 2. Compare the intrinsic value of the company's stock (valuation) compared to the current stock price. Interpret and explain the results. 2. EVA & MVA Analysis Prepare an analysis of EVA and MVA for the selected company. Excel models are provided by the instructor. Explain the results. The analysis associated with the assignment needs to include: 1. Explanation of the Variables Used in the DCF Valuation - Explain and justify all of the variables used in the DCF valuation. These would include, but are not limited to, the growth rates, capitalization structure, cost of capital components, WACC, etc. 2. Explanation and Interpretation of DCF Valuation Results - Explain the results of the DCF analysis. This should include an analysis of any difference between the results of the DCF analysis and the current stock price. 3. Explanation of the Data Used for the EVA Analysis and Interpretation of Results - Present the results of the EVA analysis and explain what they mean. The analysis should discuss future EVA results and what variables can affect those results either positively or negatively. 4. Explanation of the Data Used for the MVA Analysis and Interpretation of Results - Present the results of the MVA analysis and explain what they mean. The analysis should explain a discussion of future MVA results and what variables can affect those results either positively or negatively. Writing Instructions The discussion portion of the analysis should be three to five pages in length, double spaced, and should employ APA style and format for reference citations. Supporting data (e.g., figures, tables, etc.) and references should be submitted limited to four separate attachments in an appendix after the written portion of the paper. The paper should begin with a short introduction and then proceed to examine the four topics outlined in the previous section. The subheadings used in the paper should be: 1. Introduction 2. Explanation of the Variables Used in the DCF Valuation 3. Explanation and Interpretation of DCF Valuation Results (Including comparison and explanation of differences between the current stock price and results of the DCF valuation.) 4. Explanation of the Data Used for the EVA Analysis and Interpretation of Results 5. Explanation of the Data Used for the MVA Analysis and Interpretation of Results Completeness of analysis: The analysis must demonstrate a solid understanding of capital budgeting and the analysis of corporate investments. All assumptions used in preparing the projections for the project need to be thoroughly explained. Organization: The paper should be well-organized and follow a logical pattern of analysis and discussion. Presentation: Papers should meet professional business standards and meet APA formatting requirements. Spelling, punctuation, and grammar: There should be few errors in grammar and punctuation. All sentences must be complete and well-structured. Submission and Format: The completed paper is to be submitted to the \"Gradebook\" location designated for the assignment. The paper must be in Word format otherwise no credit is earned for the assignment. The paper is also to be submitted to the Online Classroom. This will allow students to examine and discuss the various projects. CALCULATION OF EVA AND MVA Name of Company Vonage (VG) Year Short-Term Debt 2017 $601,000.0 From Balance Sheet - End of Previous Year Long-Term Debt Preferred Stock $0.00 Common Stock From Balance Sheet - End of Previous Year Preferred Dividend $ Preferred Stock Price per share per share $300,264,000.00 $0.00 From Balance Sheet - End of Previous Year $0.00 $282,000.0 Yahoo Finance Balance Sheet - End of Previous Year Paid-In Capital $0.00 Yahoo Finance Balance Sheet - End of Previous Year Retained Earnings $637,113,000.0 Yahoo Finance Balance Sheet - End of Previous Year Treasury Stock ($216,125,000.0) Enter as Negative Amount Total Invested Capital $722,135,000.0 Computer Calculates Price of Stock $6.20 Current Market Data Number of Shares Outstanding 219,680,000.0 Yahoo Finance - Statistics EBIT $43,887,000.0 Yahoo Finance Income Statement - Current Year Tax Rate WATCH THE DECIMAL POINT 42.28% Yahoo Finance Income Statement (Tax Expense / Income Before Tax) Less: Taxes $18,556,467.95 Computer Calculates Equals NOPAT $25,330,532.05 Computer Calculates Rate on Short-Term Debt 1.18% Yahoo Finance Composite Bond Rates (Corporate Bonds 2 Year) Rate on Long-Term Debt 2.21% Yahoo Finance Composite Bond Rates (Corporate Bonds 10 Year) Market Risk Premium 5.50% Normally 5% - 6% Risk-Free Rate (L/T Treasury bond) 2.53% Wall Street Journal - Corporate Borrowing Rates & Yields Debt to Equity Ratio 0.47 Computer Calculates Beta of Stock 0.02 From Yahoo Finance - Statistics Cost of Preferred Stock 0.00% Computer Calculates Cost of Equity Capital 2.640% % S-T Debt WACC 2.46% % L-T Debt 0.08% % Equity 41.58% % Preferred Stock 58.34% Analysis is Computer Generated CALCULATION OF EVA - ECONOMIC VALUE ADDED EBIT $43,887,000.00 Less: Taxes Equals: NOPAT (Net Equals: Invested Operating Profit After Capital - Beginning of Tax) Period $18,556,467.95 $25,330,532.05 WACC $722,135,000.00 2.46% Return on Invested Capital 3.51% Capital Charge $17,764,454.20 NOPAT/Inv. Capital Firm is Creating Shareholder Wealth CALCULATION OF MVA - MARKET VALUE ADDED Market Value of Equity $1,362,016,000.00 Plus: Market Value of Equals: Market Value Debt of Firm $300,865,000.00 $1,662,881,000.00 Firm is Creating Shareholder Wealth Minus: Total Invested Capital $722,135,000.00 Equals: MVA $940,746,000.00 EVA (NOPAT Capital Charge) $7,566,077.85 0.00% ECONOMIC VALUE ADDED (EVA) MARKET VALUE ADDED (MVA) ECONOMIC VALUE ADDED EVA is a measure that is used to estimate the amount of economic value added by management during a given year. MARKET VALUE ADDED MVA is the difference between the market value of equity and the amount of Equity Capital that investors have supplied. EVA &MVA ARE CLOSELY RELATED EVA and MVA are related in a significant way. Managing the firm in ways that increase EVA will generally lead to higher MVA, an important measure of shareholder wealth creation. ECONOMIC VALUE ADDED EVA = Net Operating Profit After-tax - (WACC * Invested Capital) Where Invested Capital = (Debt + Equity); It is determined by summing short-term debt, long-term debt and shareholder equity (capital stock, paid-in capital and retained earnings). Net Operating Profit is determined by reducing operating income by the amount of estimated income taxes. The firm's weighted average cost of capital is used to calculate the annual capital charge. It is determined by multiplying the after-tax weighted average cost of capital by the amount of invested capital. EVA Example Year 1 2 3 4 5 6 7 8 9 Year 1 2 3 4 5 6 7 8 9 Sales $82,800.0 $97,200.0 $181,400.0 $196,900.0 $283,300.0 $237,000.0 $372,800.0 $204,100.0 $239,500.0 Short-term Debt $500.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Long-term Debt $26,100.0 $22,800.0 $69,500.0 $61,200.0 $102,900.0 $89,600.0 $76,300.0 $63,000.0 $51,500.0 Common Stock $5,000.0 $5,000.0 $5,000.0 $5,000.0 $5,000.0 $5,000.0 $5,000.0 $4,500.0 $4,300.0 Operating Income (EBIT) Less: Taxes $13,400.0 $3,200.0 $18,100.0 $4,700.0 $67,500.0 $19,600.0 $85,600.0 $24,300.0 $130,600.0 $36,700.0 $107,300.0 $31,200.0 $153,800.0 $45,800.0 $72,200.0 $22,400.0 $70,300.0 $21,000.0 Equals: Net Operating Profit After Taxes (NOPAT) $10,200.0 $13,400.0 $47,900.0 $61,300.0 $93,900.0 $76,100.0 $108,000.0 $49,800.0 $49,300.0 Paid-in Capital $16,000.0 $16,000.0 $16,000.0 $16,000.0 $16,000.0 $16,000.0 $16,000.0 $0.0 $0.0 Invested Capital $63,992.0 $69,075.0 $159,641.0 $205,744.0 $330,499.0 $387,244.0 $476,009.0 $353,520.0 $334,752.0 Retained Total Capital Earnings Invested $16,392.0 $63,992.0 $25,275.0 $69,075.0 $69,141.0 $159,641.0 $123,544.0 $205,744.0 $206,599.0 $330,499.0 $276,644.0 $387,244.0 $378,709.0 $476,009.0 $286,020.0 $353,520.0 $278,952.0 $334,752.0 WACC 12.60% 15.93% 31.07% 28.72% 27.18% 19.63% 22.51% 14.87% 14.04% Capital Charge $8,063.0 $11,003.6 $49,600.5 $59,089.7 $89,829.6 $76,016.0 $107,149.6 $52,568.4 $46,999.2 EVA (NOPAT Capital Charge) $2,137.0 $2,396.4 ($1,700.5) $2,210.3 $4,070.4 $84.0 $850.4 ($2,768.4) $2,300.8 MARKET VALUE ADDED (MVA) MVA is the difference between the market value of equity and the amount of equity capital that investors have supplied. MVA measures the amount of wealth a firm has created over time. As such, it is the principal indicator of shareholder wealth maximization. For the purpose of estimating MVA, the value of a firm equals the market value of its debt and equity. Year 1 2 3 4 5 6 7 8 9 Market Value Plus: Market Equals: Market of Equity Value of Debt Value of Firm $75,000.0 $26,100.0 $101,100.0 $121,100.0 $22,800.0 $143,900.0 $354,200.0 $69,500.0 $423,700.0 $624,600.0 $61,200.0 $685,800.0 $1,034,800.0 $102,900.0 $1,137,700.0 $1,110,900.0 $89,600.0 $1,200,500.0 $1,414,200.0 $76,300.0 $1,490,500.0 $1,069,700.0 $63,000.0 $1,132,700.0 $985,500.0 $51,500.0 $1,037,000.0 Minus: Total Capital Invested Equals: MVA $63,992.0 $37,108.0 $69,075.0 $74,825.0 $159,641.0 $264,059.0 $205,744.0 $480,056.0 $330,499.0 $807,201.0 $387,244.0 $813,256.0 $476,009.0 $1,014,491.0 $353,520.0 $779,180.0 $334,752.0 $702,248.0 version 4.00 Russell Lundholm Richard Sloan 2012, Russell Lundholm and Richard Sloan. STEPS: 1) enter financial data on the Financial Statements Sheet, 2) examine the Ratio Analysis and Cash Flow Analysis, 3) enter forecasts on the Forecasting Assumptions Sheet to create future Financial Statement predictions, 4) enter cost of capital assumptions on the Valuation Parameters Sheet to determine the company's value, 5) evaluate the details of the resulting valuation for either the Residual Income of Discounted Cash Flow models. Other Useful Links: Where to buy the latest 'Equity Valuation and Analysis' textbook Check here for updated versions of eVal Supplements to the textbook cases version 4.00 tement predictions, e company's value, unted Cash Flow models. Financial Statements Company Name and Ticker Common Shares Outstanding Estimated Price/Share=-$0.01 Fiscal Year End (YYYY-MM-DD) ($000s) Data can be entered manually in financial statements or as a block cut-andpaste from the Case Data Sheet to the Raw Data Input section below. Jump to Raw Data Input Vonage Holding VG Link to Form 10-Ks 219,678,000 (in 000s at most recent fiscal year end) Actual 2012/12/31 Actual 2013/12/31 Actual 2014/12/31 Actual 2015/12/31 Actual 2016/12/31 Forecast 2017/12/31 Forecast 2018/12/31 Forecast 2019/12/31 Forecast 2020/12/31 Forecast 2021/12/31 Forecast 2022/12/31 Forecast 2023/12/31 Forecast 2024/12/31 Forecast 2025/12/31 Forecast 2026/12/31 Forecast 2027/12/31 Forecast 2028/12/31 Income Statement Sales (Net) Cost of Goods Sold Gross Profit R&D Expense SG&A Expense EBITDA Depreciation & Amortization EBIT Net Interest Expense Non-Operating Income (Loss) EBT Income Taxes Other Income (Loss) Net Income Before Ext. Items Ext. Items & Disc. Ops. Minority Interest in Earnings Preferred Dividends Net Income (available to common) 849,114 (271,010) 578,104 0 (480,223) 97,881 (33,271) 64,610 (5,986) 109 58,733 (22,095) (11) 36,627 0 0 0 36,627 829,067 (251,298) 577,769 0 (489,748) 88,021 (35,672) 52,349 (6,557) 307 46,099 (18,194) (104) 27,801 0 488 0 28,289 868,953 (268,868) 600,085 0 (502,945) 97,140 (49,333) 47,807 (6,823) 212 41,196 (21,760) 11 19,447 0 819 0 20,266 895,072 (295,978) 599,094 (27,220) (457,242) 114,632 (61,640) 52,992 (8,786) 89 44,295 (18,418) (842) 25,035 (2,439) 59 0 22,655 955,621 (355,150) 600,471 (29,759) (455,123) 115,589 (71,435) 44,154 (13,042) 79 31,191 (12,938) (346) 17,907 0 0 0 17,907 1,016,995 (377,959) 639,036 (31,670) (484,353) 123,013 (87,599) 35,413 (16,055) 84 19,443 (8,065) 0 11,378 0 0 0 11,378 1,078,831 (400,940) 677,891 (33,596) (513,803) 130,492 (93,071) 37,421 (17,058) 89 20,453 (8,484) 0 11,969 0 0 0 11,969 1,140,734 (423,946) 716,788 (35,524) (543,285) 137,980 (98,566) 39,414 (18,065) 94 21,444 (8,895) 0 12,549 0 0 0 12,549 1,202,285 (446,821) 755,464 (37,440) (572,599) 145,425 (104,048) 41,377 (19,069) 99 22,407 (9,294) 0 13,112 0 0 0 13,112 1,263,042 (469,401) 793,641 (39,332) (601,535) 152,774 (109,479) 43,294 (20,065) 104 23,334 (9,679) 0 13,655 0 0 0 13,655 1,322,547 (491,515) 831,031 (41,185) (629,875) 159,971 (114,820) 45,151 (21,044) 109 24,217 (10,045) 0 14,172 0 0 0 14,172 1,380,329 (512,990) 867,339 (42,985) (657,394) 166,960 (120,028) 46,932 (21,998) 114 25,048 (10,390) 0 14,658 0 0 0 14,658 1,435,911 (533,646) 902,264 (44,716) (683,865) 173,683 (125,062) 48,621 (22,921) 119 25,819 (10,710) 0 15,109 0 0 0 15,109 1,488,817 (553,309) 935,508 (46,363) (709,062) 180,083 (129,880) 50,203 (23,804) 123 26,522 (11,001) 0 15,521 0 0 0 15,521 1,538,577 (571,802) 966,775 (47,913) (732,761) 186,102 (134,439) 51,662 (24,639) 127 27,150 (11,262) 0 15,888 0 0 0 15,888 1,584,734 (588,956) 995,778 (49,350) (754,744) 191,685 (138,699) 52,986 (25,420) 131 27,697 (11,489) 0 16,208 0 0 0 16,208 1,632,276 (606,624) 1,025,652 (50,831) (777,386) 197,435 (142,860) 54,575 (26,183) 135 28,528 (11,833) 0 16,694 0 0 0 16,694 97,110 27,015 5,470 24,835 154,430 60,533 5,656 26,241 300,529 547,389 84,663 27,051 10,584 27,851 150,149 52,243 4,405 181,034 254,918 642,749 47,959 20,501 10,081 32,003 110,544 49,630 10,028 269,793 235,307 675,302 67,634 22,026 5,542 37,531 132,733 49,483 9,210 381,015 212,125 784,566 29,679 39,835 4,116 26,041 99,671 48,415 1,851 581,590 208,895 940,422 31,585 42,393 4,380 27,713 106,072 51,524 1,970 618,942 222,311 1,000,820 33,506 44,971 4,647 29,399 112,522 54,657 2,090 656,575 235,828 1,061,672 35,428 47,551 4,913 31,085 118,978 57,793 2,210 694,250 249,360 1,122,591 37,340 50,117 5,178 32,763 125,398 60,912 2,329 731,709 262,815 1,183,163 39,227 52,650 5,440 34,418 131,735 63,990 2,446 768,686 276,096 1,242,953 41,075 55,130 5,696 36,040 137,941 67,005 2,562 804,901 289,104 1,301,512 42,869 57,539 5,945 37,614 143,968 69,932 2,674 840,067 301,734 1,358,375 44,595 59,856 6,185 39,129 149,765 72,748 2,781 873,894 313,884 1,413,073 46,239 62,061 6,413 40,571 155,283 75,429 2,884 906,092 325,450 1,465,137 47,784 64,135 6,627 41,927 160,473 77,950 2,980 936,376 336,327 1,514,106 49,218 66,060 6,826 43,185 165,287 80,288 3,070 964,468 346,417 1,559,529 50,694 68,041 7,030 44,480 170,246 82,697 3,162 993,402 356,809 1,606,315 30,804 74,028 0 91,590 196,422 27,257 1,565 730 225,974 0 (40,541) 1,088,186 (726,230) 321,415 547,389 26,222 49,867 0 118,026 194,115 108,534 1,628 436 304,713 (38) (100,274) 1,136,289 (697,941) 338,074 642,749 23,365 42,564 0 119,766 185,695 143,836 1,419 855 331,805 0 (163,490) 1,184,662 (677,675) 343,497 675,302 19,398 42,798 0 128,732 190,928 198,755 5,291 851 395,825 0 (181,186) 1,224,947 (655,020) 388,741 784,566 22,038 30,751 0 141,637 194,426 300,264 3,985 450 499,125 0 (232,437) 1,310,847 (637,113) 441,297 940,422 23,453 32,726 0 150,734 206,913 319,548 4,241 479 531,181 0 (247,365) 1,342,739 (625,735) 717,004 1,000,820 24,879 34,716 0 159,899 219,494 338,978 4,499 508 563,478 0 (262,406) 1,374,366 (613,766) 760,600 1,061,672 26,307 36,708 0 169,073 232,088 358,428 4,757 537 595,810 0 (277,462) 1,405,460 (601,217) 804,243 1,122,591 27,726 38,688 0 178,196 244,611 377,768 5,014 566 627,959 0 (292,433) 1,435,742 (588,105) 847,637 1,183,163 29,128 40,644 0 187,201 256,972 396,858 5,267 595 659,692 0 (307,211) 1,464,922 (574,450) 890,473 1,242,953 30,500 42,558 0 196,021 269,079 415,555 5,515 623 690,772 0 (321,685) 1,492,702 (560,278) 932,425 1,301,512 31,832 44,418 0 204,585 280,835 433,711 5,756 650 720,952 0 (335,739) 1,518,782 (545,620) 973,162 1,358,375 33,114 46,206 0 212,823 292,143 451,175 5,988 676 749,982 0 (349,259) 1,542,859 (530,510) 1,012,349 1,413,073 34,334 47,909 0 220,664 302,907 467,799 6,208 701 777,615 0 (362,127) 1,564,639 (514,990) 1,049,649 1,465,137 35,482 49,510 0 228,040 313,031 483,433 6,416 725 803,605 0 (374,230) 1,583,832 (499,102) 1,084,731 1,514,106 36,546 50,995 0 234,881 322,422 497,937 6,608 746 827,713 0 (385,457) 1,600,166 (482,894) 1,117,273 1,559,529 37,643 52,525 0 241,927 332,095 512,875 6,807 769 852,545 0 (397,021) 1,616,990 (466,199) 1,150,791 1,606,315 0 (726,230) 28,289 0 0 (697,941) (697,941) 20,266 0 0 (677,675) (677,675) 22,655 0 0 (655,020) (655,020) 17,907 0 0 (637,113) (637,113) 11,378 0 0 (625,735) (625,735) 11,969 0 0 (613,766) (613,766) 12,549 0 0 (601,217) (601,217) 13,112 0 0 (588,105) (588,105) 13,655 0 0 (574,450) (574,450) 14,172 0 0 (560,278) (560,278) 14,658 0 0 (545,620) (545,620) 15,109 0 0 (530,510) (530,510) 15,521 0 0 (514,990) (514,990) 15,888 0 0 (499,102) (499,102) 16,208 0 0 (482,894) (482,894) 16,694 0 0 (466,199) 40,361 (3,734) 36,627 0.3762 338,935 17,520 321,415 31,770 (3,481) 28,289 0.3947 372,518 34,444 338,074 22,666 (2,400) 20,266 0.5282 347,208 3,711 343,497 27,729 (5,074) 22,655 0.4158 425,708 36,967 388,741 25,539 (7,632) 17,907 0.4148 531,162 89,865 441,297 20,773 (9,395) 11,378 0.4148 812,641 95,637 717,004 21,951 (9,982) 11,969 0.4148 862,051 101,451 760,600 23,120 (10,571) 12,549 0.4148 911,515 107,273 804,243 24,272 (11,159) 13,112 0.4148 960,698 113,061 847,637 25,397 (11,742) 13,655 0.4148 1,009,247 118,774 890,473 26,487 (12,315) 14,172 0.4148 1,056,795 124,370 932,425 27,531 (12,873) 14,658 0.4148 1,102,966 129,804 973,162 28,522 (13,413) 15,109 0.4148 1,147,380 135,031 1,012,349 29,451 (13,930) 15,521 0.4148 1,189,655 140,006 1,049,649 30,307 (14,419) 15,888 0.4148 1,229,416 144,685 1,084,731 31,084 (14,876) 16,208 0.4148 1,266,298 149,026 1,117,273 32,017 (15,322) 16,694 0.4148 1,304,287 153,497 1,150,791 2015/12/31 895,072 (295,978) (27,220) (457,242) (61,640) (8,786) 89 (18,418) 59 (842) (2,439) 0 67,634 22,026 5,542 37,531 49,483 9,210 381,015 212,125 19,398 42,798 0 128,732 198,755 6,142 202,587 0 (181,186) 1,224,947 (655,020) 0 2016/12/31 955,621 (355,150) (29,759) (455,123) (71,435) (13,042) 79 (12,938) 0 (346) 0 0 29,679 39,835 4,116 26,041 48,415 1,851 581,590 208,895 22,038 30,751 0 141,637 300,264 4,435 188,966 0 (232,437) 1,310,847 (637,113) 0 Balance Sheet Operating Cash and Market. Sec. Receivables Inventories Other Current Assets Total Current Assets PP&E (Net) Investments Intangibles Other Assets Total Assets Current Debt Accounts Payable Income Taxes Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Other Liabilities Deferred Taxes Total Liabilities Minority Interest Preferred Stock Paid in Common Capital (Net) Retained Earnings Total Common Equity Total Liabilities and Equity Statement of Retained Earnings Beg. Retained Earnings +Net Income -Common Dividends +/-Clean Surplus Plug (Ignore) =End. Retained Earnings Values for Dupont Analysis and Valuation Net Operating Income Net Financial Expense Net Income Effective Tax Rate Net Operating Assets Net Financial Obligations Total Common Equity Raw Data Inputs cut-and-paste raw data block from DataMaker file here Company Name and Ticker Common Shares Outstanding Fiscal Year End (YYYY-MM-DD) Sales (Net) Cost of Goods Sold R&D Expense SG&A Expense Depreciation & Amortization Interest Expense Non-Operating Income (Loss) Income Taxes Minority Interest in Earnings Other Income (Loss) Ext. Items & Disc. Ops. Preferred Dividends Operating Cash and Market. Sec. Receivables Inventories Other Current Assets PP&E (Net) Investments Intangibles Other Assets Current Debt Accounts Payable Income Taxes Payable Other Current Liabilities Long-Term Debt Other Liabilities Deferred Taxes Minority Interest Preferred Stock Paid in Common Capital (Net) Retained Earnings Common Dividends Vonage Holding 215,751 2012/12/31 849,114 (271,010) 0 (480,223) (33,271) (5,986) 109 (22,095) 0 (11) 0 0 97,110 27,015 5,470 24,835 60,533 5,656 26,241 300,529 30,804 74,028 0 91,590 27,257 2,295 290,166 0 (40,541) 1,088,186 (726,230) 0 VG 2013/12/31 829,067 (251,298) 0 (489,748) (35,672) (6,557) 307 (18,194) 488 (104) 0 0 84,663 27,051 10,584 27,851 52,243 4,405 181,034 254,918 26,222 49,867 0 118,026 108,534 2,064 246,539 (38) (100,274) 1,136,289 (697,941) 0 2014/12/31 868,953 (268,868) 0 (502,945) (49,333) (6,823) 212 (21,760) 819 11 0 0 47,959 20,501 10,081 32,003 49,630 10,028 269,793 235,307 23,365 42,564 0 119,766 143,836 2,274 227,090 0 (163,490) 1,184,662 (677,675) 0 A Windows vs Macintosh issue can cause the fiscal year end dates to be off by roughly 4 years. If this occurs, select and copy the 1462 cell below, select the cells with the dates, choose Paste Special Values and select Subtract or Add. 1462 Ratio Analysis Company Name Vonage Holding Fiscal Year End Date Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2012/12/31 2013/12/31 2014/12/31 2015/12/31 2016/12/31 2017/12/31 2018/12/31 2019/12/31 2020/12/31 2021/12/31 2022/12/31 2023/12/31 2024/12/31 2025/12/31 2026/12/31 2027/12/31 2028/12/31 Annual Growth Rates Sales Assets Common Equity Earnings Free Cash Flow to Investors Sustainable Growth Rate -2.4% 17.4% 5.2% -22.8% 4.8% 5.1% 1.6% -28.4% #N/A 5.9% 3.0% 16.2% 13.2% 11.8% #N/A 6.2% 6.8% 19.9% 13.5% -21.0% #N/A 4.3% 6.4% 6.4% 62.5% -36.5% #N/A 2.0% 6.1% 6.1% 6.1% 5.2% #N/A 1.6% 5.7% 5.7% 5.7% 4.8% #N/A 1.6% 5.4% 5.4% 5.4% 4.5% #N/A 1.6% 5.1% 5.1% 5.1% 4.1% #N/A 1.6% 4.7% 4.7% 4.7% 3.8% #N/A 1.6% 4.4% 4.4% 4.4% 3.4% #N/A 1.5% 4.0% 4.0% 4.0% 3.1% #N/A 1.5% 3.7% 3.7% 3.7% 2.7% #N/A 1.5% 3.3% 3.3% 3.3% 2.4% #N/A 1.5% 3.0% 3.0% 3.0% 2.0% #N/A 1.5% 3.0% 3.0% 3.0% 3.0% #N/A 1.5% 0.086 0.086 0.089 0.059 0.059 0.063 0.062 0.071 0.072 0.043 0.044 0.053 0.020 0.020 0.031 0.016 0.016 0.026 0.016 0.016 0.026 0.016 0.016 0.026 0.016 0.016 0.026 0.016 0.015 0.026 0.015 0.015 0.025 0.015 0.015 0.025 0.015 0.015 0.025 0.015 0.015 0.025 0.015 0.015 0.025 0.015 0.015 0.025 0.043 0.034 1.393 1.805 0.086 0.023 1.319 1.934 0.059 0.025 1.226 1.994 0.062 0.019 1.108 2.078 0.043 0.011 1.048 1.676 0.020 0.011 1.046 1.396 0.016 0.011 1.045 1.396 0.016 0.011 1.043 1.396 0.016 0.011 1.041 1.396 0.016 0.011 1.040 1.396 0.016 0.011 1.038 1.396 0.015 0.011 1.036 1.396 0.015 0.010 1.035 1.396 0.015 0.010 1.033 1.396 0.015 0.010 1.031 1.396 0.015 0.010 1.031 1.396 0.015 0.048 0.038 2.331 0.089 0.134 (0.045) 0.079 0.086 0.026 2.415 0.063 0.126 (0.063) 0.056 0.059 0.031 2.316 0.072 0.249 (0.178) 0.056 0.062 0.027 1.997 0.053 0.120 (0.067) 0.153 0.043 0.020 1.514 0.031 0.101 (0.070) 0.160 0.020 0.020 1.288 0.026 0.101 (0.075) 0.133 0.016 0.020 1.286 0.026 0.101 (0.075) 0.133 0.016 0.020 1.284 0.026 0.101 (0.075) 0.133 0.016 0.020 1.282 0.026 0.101 (0.076) 0.133 0.016 0.020 1.280 0.026 0.101 (0.076) 0.133 0.016 0.020 1.278 0.025 0.101 (0.076) 0.133 0.015 0.020 1.276 0.025 0.101 (0.076) 0.133 0.015 0.020 1.274 0.025 0.101 (0.076) 0.133 0.015 0.020 1.272 0.025 0.101 (0.076) 0.133 0.015 0.020 1.270 0.025 0.101 (0.076) 0.133 0.015 0.020 1.270 0.025 0.101 (0.076) 0.133 0.015 0.681 0.115 0.076 0.047 0.048 0.697 0.106 0.063 0.038 0.038 0.691 0.112 0.055 0.026 0.026 0.669 0.128 0.059 0.035 0.031 0.628 0.121 0.046 0.027 0.027 0.628 0.121 0.035 0.020 0.020 0.628 0.121 0.035 0.020 0.020 0.628 0.121 0.035 0.020 0.020 0.628 0.121 0.034 0.020 0.020 0.628 0.121 0.034 0.020 0.020 0.628 0.121 0.034 0.020 0.020 0.628 0.121 0.034 0.020 0.020 0.628 0.121 0.034 0.020 0.020 0.628 0.121 0.034 0.020 0.020 0.628 0.121 0.034 0.020 0.020 0.628 0.121 0.033 0.020 0.020 0.628 0.121 0.033 0.020 0.020 2.331 (57.311) 11.901 11.659 88.182 14.703 2.415 (24.995) 9.987 14.027 62.857 17.060 2.316 (19.762) 8.671 9.633 53.454 18.062 1.997 (17.139) 11.814 4.963 37.947 19.523 1.514 (13.551) 14.756 4.103 30.629 20.352 1.288 (13.529) 14.779 4.109 30.678 20.320 1.286 (13.508) 14.802 4.115 30.727 20.289 1.284 (13.487) 14.826 4.122 30.777 20.257 1.282 (13.466) 14.849 4.128 30.827 20.225 1.280 (13.444) 14.873 4.135 30.877 20.192 1.278 (13.423) 14.897 4.142 30.927 20.160 1.276 (13.401) 14.921 4.148 30.978 20.128 1.274 (13.379) 14.945 4.155 31.030 20.095 1.272 (13.358) 14.969 4.162 31.081 20.063 1.270 (13.336) 14.993 4.169 31.133 20.030 1.270 (13.336) 14.993 4.169 31.133 20.030 0.181 0.399 0.656 0.595 0.487 0.457 0.439 0.561 0.457 0.492 0.730 0.324 0.309 0.478 0.298 0.318 0.478 0.298 0.317 0.478 0.298 0.315 0.478 0.297 0.314 0.478 0.297 0.313 0.478 0.296 0.311 0.478 0.296 0.310 0.478 0.296 0.308 0.478 0.295 0.307 0.478 0.295 0.305 0.478 0.295 0.304 0.478 0.295 0.304 0.786 0.632 10.794 16.352 0.774 0.576 7.984 13.424 0.595 0.369 7.007 14.237 0.695 0.470 6.031 13.047 0.513 0.358 3.386 8.863 0.513 0.358 2.206 7.662 0.513 0.358 2.194 7.650 0.513 0.358 2.182 7.638 0.513 0.358 2.170 7.626 0.513 0.358 2.158 7.614 0.513 0.358 2.146 7.602 0.513 0.358 2.133 7.590 0.513 0.358 2.121 7.578 0.513 0.358 2.109 7.565 0.513 0.358 2.097 7.553 0.513 0.358 2.084 7.541 0.513 0.358 2.084 7.541 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Profitability Return on Equity Return on Equity (b4 non-recurring) Return on Net Operating Assets Basic Dupont Model Net Profit Margin x Total Asset Turnover x Total Leverage = Return on Equity Advanced Dupont Model Net Operating Margin x Net Operating Asset Turnover = Return on Net Operating Assets Net Borrowing Cost (NBC) Spread (RNOA - NBC) Financial Leverage (LEV) ROE = RNOA + LEV*Spread Margin Analysis Gross Margin EBITDA Margin EBIT Margin Net Operating Margin (b4 non-rec.) Net Operating Margin Turnover Analysis Net Operating Asset Turnover Net Working Capital Turnover Avge Days to Collect Receivables Avge Inventory Holding Period Avge Days to Pay Payables PP&E Turnover Analysis of Leverage - Long-Term Capital Structure Debt to Equity Ratio FFO to Total Debt CFO to Total Debt Analysis of Leverage - Short-Term Liquidity Current Ratio Quick Ratio EBIT Interest Coverage EBITDA Interest Coverage Fiscal Year Cash Flow Analysis ($000) Company Name Vonage Holding Fiscal Year End Date Pro Forma Statement of Cash Flows Operating: Net Income +Depreciation & Amortization +Increase in Deferred Taxes +Increase in Other Liabilities +Minority Interest in Earnings +Preferred Dividends =Funds From Operations -Increase in Receivables -Increase in Inventory -Increase in Other Current Assets +Increase in Accounts Payable +Increase in Taxes Payable +Increase in Other Curr. Liabilities =Cash From Operations Actual 2013/12/31 Actual 2014/12/31 Actual 2015/12/31 Actual 2016/12/31 Forecast 2017/12/31 Forecast 2018/12/31 Forecast 2019/12/31 Forecast 2020/12/31 Forecast 2021/12/31 Forecast 2022/12/31 Forecast 2023/12/31 Forecast 2024/12/31 Forecast 2025/12/31 Forecast 2026/12/31 Forecast 2027/12/31 28,289 35,672 (294) 63 (488) 0 63,242 (36) (5,114) (3,016) (24,161) 0 26,436 57,351 20,266 49,333 419 (209) (819) 0 68,990 6,550 503 (4,152) (7,303) 0 1,740 66,328 22,655 61,640 (4) 3,872 (59) 0 88,104 (1,525) 4,539 (5,528) 234 0 8,966 94,790 17,907 71,435 (401) (1,306) 0 0 87,635 (17,809) 1,426 11,490 (12,047) 0 12,905 83,600 11,378 87,599 29 256 0 0 99,262 (2,558) (264) (1,672) 1,975 0 9,097 105,838 11,969 93,071 29 258 0 0 105,327 (2,578) (266) (1,685) 1,990 0 9,165 111,953 12,549 98,566 29 258 0 0 111,402 (2,580) (267) (1,687) 1,992 0 9,175 118,035 13,112 104,048 29 257 0 0 117,446 (2,566) (265) (1,677) 1,981 0 9,123 124,041 13,655 109,479 29 253 0 0 123,416 (2,533) (262) (1,656) 1,955 0 9,005 129,927 14,172 114,820 28 248 0 0 129,268 (2,480) (256) (1,622) 1,915 0 8,819 135,644 14,658 120,028 27 241 0 0 134,954 (2,409) (249) (1,575) 1,859 0 8,564 141,146 15,109 125,062 26 232 0 0 140,430 (2,317) (239) (1,515) 1,789 0 8,238 146,385 15,521 129,880 25 221 0 0 145,646 (2,205) (228) (1,442) 1,702 0 7,841 151,315 15,888 134,439 23 208 0 0 150,558 (2,074) (214) (1,356) 1,601 0 7,375 155,890 16,208 138,699 22 192 0 0 155,121 (1,924) (199) (1,258) 1,485 0 6,841 160,067 (27,382) 1,251 (154,793) 45,611 (135,313) (46,720) (5,623) (88,759) 19,611 (121,491) (61,493) 818 (111,222) 23,182 (148,715) (70,367) 7,359 (200,575) 3,230 (260,353) (90,709) (119) (37,352) (13,416) (141,596) (96,203) (120) (37,633) (13,517) (147,473) (101,702) (120) (37,674) (13,532) (153,028) (107,166) (119) (37,460) (13,455) (158,200) (112,557) (118) (36,977) (13,281) (162,933) (117,835) (115) (36,215) (13,008) (167,172) (122,956) (112) (35,166) (12,631) (170,864) (127,878) (108) (33,827) (12,150) (173,963) (132,561) (102) (32,199) (11,565) (176,427) (136,960) (96) (30,284) (10,877) (178,218) (141,037) (89) (28,091) (10,090) (179,308) Financing: +Increase in Debt -Dividends Paid to Minority Interest -Dividends Paid on Preferred +Increase in Pref. Stock -Dividends Paid on Common +/-Net Issuance of Common Stock +/-Clean Surplus Plug (Ignore) =Cash From Financing 76,695 450 0 (59,733) 0 48,103 0 65,515 32,445 857 0 (63,216) 0 48,373 0 18,459 50,952 59 0 (17,696) 0 40,285 0 73,600 104,149 0 0 (51,251) 0 85,900 0 138,798 20,700 0 0 (14,928) 0 31,892 0 37,664 20,855 0 0 (15,040) 0 31,626 0 37,441 20,878 0 0 (15,057) 0 31,094 0 36,915 20,759 0 0 (14,971) 0 30,282 0 36,070 20,492 0 0 (14,778) 0 29,180 0 34,894 20,069 0 0 (14,473) 0 27,780 0 33,376 19,488 0 0 (14,054) 0 26,079 0 31,513 18,746 0 0 (13,519) 0 24,078 0 29,304 17,844 0 0 (12,868) 0 21,779 0 26,755 16,783 0 0 (12,103) 0 19,194 0 23,873 15,567 0 0 (11,227) 0 16,334 0 20,674 Net Change in Cash + Beginning Cash Balance = Ending Cash Balance (12,447) 97,110 84,663 (36,704) 84,663 47,959 19,675 47,959 67,634 (37,955) 67,634 29,679 1,906 29,679 31,585 1,920 31,585 33,506 1,923 33,506 35,428 1,912 35,428 37,340 1,887 37,340 39,227 1,848 39,227 41,075 1,795 41,075 42,869 1,726 42,869 44,595 1,643 44,595 46,239 1,545 46,239 47,784 1,434 47,784 49,218 Investing: -Capital Expenditures -Increase in Investments -Purchases of Intangibles -Increase in Other Assets =Cash From Investing Free Cash Flow to Common Equity Net Income - Increase in Common Equity +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Common Equity 28,289 (16,659) 0 11,630 20,266 (5,423) 0 14,843 22,655 (45,244) 0 (22,589) 17,907 (52,556) 0 (34,649) 11,378 (275,707) 0 (264,329) 11,969 (43,595) 0 (31,626) 12,549 (43,643) 0 (31,094) 13,112 (43,395) 0 (30,282) 13,655 (42,835) 0 (29,180) 14,172 (41,952) 0 (27,780) 14,658 (40,737) 0 (26,079) 15,109 (39,187) 0 (24,078) 15,521 (37,300) 0 (21,779) 15,888 (35,082) 0 (19,194) 16,208 (32,542) 0 (16,334) Computation based on SCF: +Cash From Operations -Increase in Cash +Cash From Investing +Increase in Debt -Dividends Paid to Minority Interest -Dividends Paid on Preferred +Increase in Preferred Stock +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Common Equity 57,351 12,447 (135,313) 76,695 450 0 (59,733) 0 (48,103) 66,328 36,704 (121,491) 32,445 857 0 (63,216) 0 (48,373) 94,790 (19,675) (148,715) 50,952 59 0 (17,696) 0 (40,285) 83,600 37,955 (260,353) 104,149 0 0 (51,251) 0 (85,900) 105,838 (1,906) (141,596) 20,700 0 0 (14,928) 0 (31,892) 111,953 (1,920) (147,473) 20,855 0 0 (15,040) 0 (31,626) 118,035 (1,923) (153,028) 20,878 0 0 (15,057) 0 (31,094) 124,041 (1,912) (158,200) 20,759 0 0 (14,971) 0 (30,282) 129,927 (1,887) (162,933) 20,492 0 0 (14,778) 0 (29,180) 135,644 (1,848) (167,172) 20,069 0 0 (14,473) 0 (27,780) 141,146 (1,795) (170,864) 19,488 0 0 (14,054) 0 (26,079) 146,385 (1,726) (173,963) 18,746 0 0 (13,519) 0 (24,078) 151,315 (1,643) (176,427) 17,844 0 0 (12,868) 0 (21,779) 155,890 (1,545) (178,218) 16,783 0 0 (12,103) 0 (19,194) 160,067 (1,434) (179,308) 15,567 0 0 (11,227) 0 (16,334) Financing Flows: +Dividends Paid -Net Issuance of Common Stock = Free Cash Flow to Common Equity 0 (48,103) (48,103) 0 (48,373) (48,373) 0 (40,285) (40,285) 0 (85,900) (85,900) 0 (31,892) (31,892) 0 (31,626) (31,626) 0 (31,094) (31,094) 0 (30,282) (30,282) 0 (29,180) (29,180) 0 (27,780) (27,780) 0 (26,079) (26,079) 0 (24,078) (24,078) 0 (21,779) (21,779) 0 (19,194) (19,194) 0 (16,334) (16,334) 31,770 (33,583) 0 (1,813) 22,666 25,310 0 47,976 27,729 (78,500) 0 (50,771) 25,539 (105,454) 0 (79,915) 20,773 (281,479) 0 (260,706) 21,951 (49,410) 0 (27,459) 23,120 (49,464) 0 (26,344) 24,272 (49,183) 0 (24,911) 25,397 (48,549) 0 (23,152) 26,487 (47,548) 0 (21,061) 27,531 (46,171) 0 (18,640) 28,522 (44,414) 0 (15,891) 29,451 (42,275) 0 (12,825) 30,307 (39,761) 0 (9,454) 31,084 (36,882) 0 (5,798) 57,351 12,447 (135,313) 6,557 (2,588) 0 (61,546) 66,328 36,704 (121,491) 6,823 (3,604) 0 (15,240) 94,790 (19,675) (148,715) 8,786 (3,653) 0 (68,467) 83,600 37,955 (260,353) 13,042 (5,410) 0 (131,166) 105,838 (1,906) (141,596) 16,055 (6,660) 0 (28,269) 111,953 (1,920) (147,473) 17,058 (7,075) 0 (27,459) 118,035 (1,923) (153,028) 18,065 (7,493) 0 (26,344) 124,041 (1,912) (158,200) 19,069 (7,910) 0 (24,911) 129,927 (1,887) (162,933) 20,065 (8,323) 0 (23,152) 135,644 (1,848) (167,172) 21,044 (8,729) 0 (21,061) 141,146 (1,795) (170,864) 21,998 (9,125) 0 (18,640) 146,385 (1,726) (173,963) 22,921 (9,508) 0 (15,891) 151,315 (1,643) (176,427) 23,804 (9,874) 0 (12,825) 155,890 (1,545) (178,218) 24,639 (10,220) 0 (9,454) 160,067 (1,434) (179,308) 25,420 (10,544) 0 (5,798) 0 6,557 (2,588) 0 (450) (48,103) (76,695) 59,733 (61,546) 0 6,823 (3,604) 0 (857) (48,373) (32,445) 63,216 (15,240) 0 8,786 (3,653) 0 (59) (40,285) (50,952) 17,696 (68,467) 0 13,042 (5,410) 0 0 (85,900) (104,149) 51,251 (131,166) 0 16,055 (6,660) 0 0 (31,892) (20,700) 14,928 (28,269) 0 17,058 (7,075) 0 0 (31,626) (20,855) 15,040 (27,459) 0 18,065 (7,493) 0 0 (31,094) (20,878) 15,057 (26,344) 0 19,069 (7,910) 0 0 (30,282) (20,759) 14,971 (24,911) 0 20,065 (8,323) 0 0 (29,180) (20,492) 14,778 (23,152) 0 21,044 (8,729) 0 0 (27,780) (20,069) 14,473 (21,061) 0 21,998 (9,125) 0 0 (26,079) (19,488) 14,054 (18,640) 0 22,921 (9,508) 0 0 (24,078) (18,746) 13,519 (15,891) 0 23,804 (9,874) 0 0 (21,779) (17,844) 12,868 (12,825) 0 24,639 (10,220) 0 0 (19,194) (16,783) 12,103 (9,454) 0 25,420 (10,544) 0 0 (16,334) (15,567) 11,227 (5,798) 52,349 (20,782) (294) 31,273 35,672 307 (104) 0 67,148 6,556 (27,382) 1,251 (154,793) 45,611 63 0 (61,546) 47,807 (25,364) 419 22,862 49,333 212 11 0 72,418 34,042 (46,720) (5,623) (88,759) 19,611 (209) 0 (15,240) 52,992 (22,071) (4) 30,917 61,640 89 (842) (2,439) 89,365 (12,989) (61,493) 818 (111,222) 23,182 3,872 0 (68,467) 44,154 (18,348) (401) 25,405 71,435 79 (346) 0 96,573 33,920 (70,367) 7,359 (200,575) 3,230 (1,306) 0 (131,166) 35,413 (14,724) 29 20,718 87,599 84 0 0 108,401 4,670 (90,709) (119) (37,352) (13,416) 256 0 (28,269) 37,421 (15,559) 29 21,891 93,071 89 0 0 115,051 4,705 (96,203) (120) (37,633) (13,517) 258 0 (27,459) 39,414 (16,388) 29 23,055 98,566 94 0 0 121,715 4,710 (101,702) (120) (37,674) (13,532) 258 0 (26,344) 41,377 (17,204) 29 24,202 104,048 99 0 0 128,349 4,684 (107,166) (119) (37,460) (13,455) 257 0 (24,911) 43,294 (18,002) 29 25,321 109,479 104 0 0 134,905 4,623 (112,557) (118) (36,977) (13,281) 253 0 (23,152) 45,151 (18,774) 28 26,405 114,820 109 0 0 141,334 4,528 (117,835) (115) (36,215) (13,008) 248 0 (21,061) 46,932 (19,515) 27 27,445 120,028 114 0 0 147,587 4,397 (122,956) (112) (35,166) (12,631) 241 0 (18,640) 48,621 (20,217) 26 28,430 125,062 119 0 0 153,611 4,229 (127,878) (108) (33,827) (12,150) 232 0 (15,891) 50,203 (20,875) 25 29,352 129,880 123 0 0 159,356 4,026 (132,561) (102) (32,199) (11,565) 221 0 (12,825) 51,662 (21,482) 23 30,203 134,439 127 0 0 164,770 3,786 (136,960) (96) (30,284) (10,877) 208 0 (9,454) 52,986 (22,033) 22 30,975 138,699 131 0 0 169,805 3,512 (141,037) (89) (28,091) (10,090) 192 0 (5,798) Free Cash Flow to all Investors Net Operating Income - Increase in Net Operating Assets +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Investors Computation based on SCF: Cash From Operations -Increase in Operating Cash +Cash from Investing +Interest Expense -Tax Shield on Interest +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Investors Financing Flows: +Dividends on Common Stock +Interest Expense -Tax Shield on Interest +Dividends on Preferred Stock +Dividends Paid to Minority Interest -Net Issuance of Common Stock -Net Issuance of Debt -Net Issuance of Preferred Stock =Free Cash Flow to Investors Traditional Computation of FCF: EBIT -Taxes on EBIT +Increase in Deferred Taxes = NOPLAT +Depreciation & Amortization +Non-Operating Income (Loss) +Other Income (Loss) +Ext. Items & Disc. Ops. =Gross Cash Flow -Increase in Working Capital -Capital Expenditures -Increase in Investments -Purchases of Intangibles -Increase in Other Assets +Increase in Other Liabilities +/-Clean Surplus Plug (Ignore) =Free Cash Flow to Investors Credit Analysis Company Name Vonage Holding Fiscal Year End Date Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 2012/12/31 2013/12/31 2014/12/31 2015/12/31 2016/12/31 2017/12/31 2018/12/31 2019/12/31 2020/12/31 2021/12/31 2022/12/31 2023/12/31 2024/12/31 2025/12/31 2026/12/31 2027/12/31 2028/12/31 Analysis of Leverage - Long-Term Capital Structure Debt to Equity Ratio FFO to Total Debt CFO to Total Debt Analysis of Leverage - Short-Term Liquidity Current Ratio Quick Ratio EBIT Interest Coverage EBITDA Interest Coverage Analysis of Credit Risk Net Income to Total Assets implied default probability Total Liabilities to Total Assets implied default probability Quick Ratio implied default probability EBIT to Interest Expense implied default probability Inventory Holding Period implied default probability Annual Sales Growth implied default probability Average Implied Default Probability Fiscal Year 0.181 0.399 0.656 0.595 0.487 0.457 0.439 0.561 0.457 0.492 0.730 0.324 0.309 0.478 0.298 0.318 0.478 0.298 0.317 0.478 0.298 0.315 0.478 0.297 0.314 0.478 0.297 0.313 0.478 0.296 0.311 0.478 0.296 0.310 0.478 0.296 0.308 0.478 0.295 0.307 0.478 0.295 0.305 0.478 0.295 0.304 0.478 0.295 0.304 0.786 0.632 10.794 16.352 0.774 0.576 7.984 13.424 0.595 0.369 7.007 14.237 0.695 0.470 6.031 13.047 0.513 0.358 3.386 8.863 0.513 0.358 2.206 7.662 0.513 0.358 2.194 7.650 0.513 0.358 2.182 7.638 0.513 0.358 2.170 7.626 0.513 0.358 2.158 7.614 0.513 0.358 2.146 7.602 0.513 0.358 2.133 7.590 0.513 0.358 2.121 7.578 0.513 0.358 2.109 7.565 0.513 0.358 2.097 7.553 0.513 0.358 2.084 7.541 0.513 0.358 2.084 7.541 0.067 2.0% 0.413 3.0% 0.632 5.0% 10.79 1.5% 7.37 3.9% 0.0% 4.2% 3.3% 0.043 2.5% 0.474 3.0% 0.576 5.0% 7.98 1.8% 15.37 4.0% -2.4% 4.2% 3.4% 0.029 3.0% 0.491 3.5% 0.369 9.0% 7.01 1.8% 13.69 3.9% 4.8% 3.2% 4.1% 0.032 3.0% 0.505 3.5% 0.470 6.5% 6.03 1.8% 6.83 3.9% 3.0% 3.2% 3.7% 0.019 4.5% 0.531 3.5% 0.358 9.0% 3.39 2.1% 4.23 3.9% 6.8% 3.0% 4.3% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.21 5.0% 4.23 3.9% 6.4% 3.0% 4.8% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.19 5.0% 4.23 3.9% 6.1% 3.0% 4.8% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.18 5.0% 4.23 3.9% 5.7% 3.0% 4.8% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.17 5.0% 4.23 3.9% 5.4% 3.0% 4.8% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.16 5.0% 4.23 3.9% 5.1% 3.0% 4.8% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.15 5.0% 4.23 3.9% 4.7% 3.2% 4.9% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.13 5.0% 4.23 3.9% 4.4% 3.2% 4.9% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.12 5.0% 4.23 3.9% 4.0% 3.2% 4.9% 0.011 4.5% 0.531 3.5% 0.358 9.0% 2.11 5.0% 4.23 3.9% 3.7% 3.2% 4.9% 0.010 4.5% 0.531 3.5% 0.358 9.0% 2.10 5.0% 4.23 3.9% 3.3% 3.2% 4.9% 0.010 4.5% 0.531 3.5% 0.358 9.0% 2.08 5.0% 4.23 3.9% 3.0% 3.2% 4.9% 0.010 4.5% 0.531 3.5% 0.358 9.0% 2.08 5.0% 4.23 3.9% 3.0% 3.2% 4.9% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Lookup Table of default probabilit decile 1 min decile 2 min decile 3 min decile 4 min decile 5 min decile 6 min decile 7 min decile 8 min decile 9 min decile 10 NI to TA thresholds -0.448 -0.161 -0.049 0.001 0.022 0.038 0.056 0.079 0.118 NI to TA default rates 0.083 0.08 0.072 0.055 0.045 0.030 0.025 0.020 0.020 0.020 TL to TA thresholds 0.175 0.283 0.385 0.476 0.558 0.633 0.709 0.816 1.030 TL to TA default rates 0.02 0.022 0.025 0.030 0.035 0.045 0.055 0.070 0.090 0.100 Quick Ratio thresholds 0.382 0.522 0.809 0.994 1.200 1.470 1.890 2.530 4.550 Quick Ratio default rates 0.09 0.065 0.05 0.042 0.040 0.035 0.025 0.020 0.015 0.010 EBIT to Int thresholds -17.4 -3.6 -0.139 1.25 2.210 3.380 5.210 9.160 23.800 EBIT to Int default rates 0.075 0.09 0.085 0.070 0.050 0.030 0.021 0.018 0.015 0.010 Inv Holding thresholds 0.365 2.56 14.24 31.39 50 70.080 91.980 121.540 174.470 Inv Holding default rates 0.03 0.035 0.039 0.040 0.042 0.045 0.049 0.055 0.060 0.070 Sales Growth thresholds -0.203 -0.063 0.003 0.05 0.098 0.158 0.244 0.398 0.797 Sales Growth default rates 0.069 0.055 0.042 0.032 0.030 0.030 0.032 0.042 0.050 0.065 Forecasting Assumptions Company Name Vonage Holding Actual 2013/12/31 Actual 2014/12/31 Actual 2015/12/31 Actual 2016/12/31 Forecast 2017/12/31 Forecast 2018/12/31 Forecast 2019/12/31 Forecast 2020/12/31 Forecast 2021/12/31 Forecast 2022/12/31 Forecast 2023/12/31 Forecast 2024/12/31 Forecast 2025/12/31 Forecast 2026/12/31 TERMINAL YEAR Forecast 2027/12/31 0.086 0.059 0.062 0.043 0.020 0.016 0.016 0.016 0.016 0.016 0.015 0.015 0.015 0.015 0.015 -2.4% 30.3% 0.0% 59.1% 22.3% 6.8% 0.0% 39.5% -1.7% 0.0% 0.0% 0.0% 4.8% 30.9% 0.0% 57.9% 17.9% 4.5% 0.0% 52.8% -4.2% 0.0% 0.0% 0.0% 3.0% 33.1% 3.0% 51.1% 16.4% 4.6% 0.0% 41.6% -0.2% -0.1% -0.3% 0.0% 6.8% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 6.4% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 6.1% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 5.7% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 5.4% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 5.1% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 4.7% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 4.4% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 4.0% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 3.7% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 3.3% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 3.0% 37.2% 3.1% 47.6% 13.5% 4.8% 0.0% 41.5% 0.0% 0.0% 0.0% 0.0% 11.4% 3.2% 2.0% 2.9% 27.3% 0.0% 10.8% 10.2% 3.3% 4.2% 3.4% 19.8% 0.0% 14.2% 5.5% 2.4% 3.7% 3.7% 15.8% 0.0% 13.8% 7.6% 2.5% 1.9% 4.2% 14.5% 0.0% 14.4% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 3.1% 4.2% 1.2% 2.7% 8.7% 0.0% 14.8% 7.1% 0.7% 3.1% 35.4% 6.3% 0.5% 21.8% 30.7% 5.7% 1.2% 31.0% 27.1% 5.5% 1.0% 42.6% 23.7% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 5.1% 0.2% 60.9% 21.9% 0.2% 0.1% 0.2% 0.1% 0.2% 0.1% 0.6% 0.1% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 0.4% 0.0% 5.6% 5.0% 0.0% -7.4% 0.0% 4.1% 16.9% 0.0% -15.6% 0.0% 3.5% 21.3% 0.0% -24.2% 0.0% 2.5% 25.3% 0.0% -23.1% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% 2.3% 31.9% 0.0% -24.7% 0.0% Estimated Price/Share=-$0.01 Fiscal Year End Date Actual 2012/12/31 Implied Return on Equity Income Statement Assumptions Sales Growth Cost of Goods Sold/Sales R&D/Sales SG&A/Sales Dep&Amort/Avge PP&E and Intang. Net Interest Expense/Avge Net Debt Non-Operating Income/Sales Effective Tax Rate Minority Interest/After Tax Income Other Income/Sales Ext. Items & Disc. Ops./Sales Pref. Dividends/Avge Pref. Stock Balance Sheet Assumptions Working Capital Assumptions Ending Operating Cash/Sales Ending Receivables/Sales Ending Inventories/COGS Ending Other Current Assets/Sales Ending Accounts Payable/COGS Ending Taxes Payable/Sales Ending Other Current Liabs/Sales Other Operating Asset Assumptions Ending Net PP&E/Sales Ending Investments/Sales Ending Intangibles/Sales Ending Other Assets/Sales Other Operating Liability Assumptions Other Liabilities/Sales Deferred Taxes/Sales Financing Assumptions Current Debt/Total Assets Long-Term Debt/Total Assets Minority Interest/Total Assets Preferred Stock/Total Assets Dividend Payout Ratio 31.9% 0.0% 56.6% 0.0% 37.6% 0.0% 0.0% 0.0% Valuation Parameters Estimated Price/Share=-$0.01 Company Name: Vonage Holding Required Valuation Parameters (to compute value of common equity): Enter Cost of Equity Capital: Enter Value of Contingent Claims on Common Equity ($000): Enter Date of Valuation: Enter Dilution Factor for Splits Occurring Since Latest Fiscal Year End: Optional Valuation Parameters (to compute value to all investors): Enter Cost of Net Debt: Enter Cost of Preferred Stock: Enter Cost of Minority Interest: Adjust the Weighted Average Cost of Capital Input such that the two equity values below are approximately equal: 3.44% 0 2017/04/17 2.00 4.83% 0.00% 0.00% 3.3300% up Residual Income Valuation ($000) Company Name Most Recent Fiscal Year End Date of Valuation Cost of Common Equity Teriminal Growth Rate Vonage Holding 12/31/2016 4/17/2017 3.44% 3.00% Fiscal Year of Forecast Valuation to Common Equity Net Income Common Equity at Beginning of Year Residual Income Present Value of Residual Income Present Value Beyond 10 Years Present Value of First 10 Years Common Equity as of 12/31/2016 Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share Valuation to All Investors Cost of Debt Cost of Preferred Stock Cost of Minority Interest After Tax Weighted Average Cost of Capital Net Interest Expense to Net Debtholders Beginning Book Value of Debt Residual Interest Expense Present Value of Residual Interest Income Value of Debt Dividends to Preferred Stockholders Beginning Book Value of Preferred Stock Residual Income to Preferred Stock Present Value of Preferred Residual Income Value of Preferred Stock Minority Interest in Earnings Beginning Book Value of Minority Interest Residual Income to Minority Interest Present Value of MI Residual Income Value of Minority Interest Net Operating Income Beginning Net Operating Assets Residual Income to all Investors Present Value of Residual Investor Income Entity Value Less Value of Debt Less Value of Preferred Stock Less Value of Minority Interest Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share 2017/12/31 2018/12/31 11,378 441,297 (3,803) (3,676) (3,420,427) (123,499) 2019/12/31 2020/12/31 2021/12/31 2022/12/31 2023/12/31 2024/12/31 2025/12/31 2026/12/31 2027/12/31 2028/12/31 11,969 717,004 (12,696) (11,865) 12,549 760,600 (13,616) (12,302) 13,112 804,243 (14,553) (12,712) 13,655 847,637 (15,504) (13,092) 14,172 890,473 (16,460) (13,437) 14,658 932,425 (17,417) (13,746) 15,109 973,162 (18,368) (14,013) 15,521 1,012,349 (19,304) (14,238) 15,888 1,049,649 (20,220) (14,418) 16,208 1,084,731 (21,107) (14,549) 16,694 1,117,273 (21,740) (14,487) 16,055 322,302 500 477 338,867 17,058 343,002 503 458 18,065 363,857 504 437 19,069 384,735 501 415 20,065 405,494 495 391 21,044 425,986 484 365 21,998 446,055 470 338 22,921 465,543 452 310 23,804 484,289 431 282 24,639 502,133 405 253 25,420 518,915 376 224 26,183 534,483 387 220 0 (232,437) 0 0 (232,437) 0 (247,365) 0 0 0 (262,406) 0 0 0 (277,462) 0 0 0 (292,433) 0 0 0 (307,211) 0 0 0 (321,685) 0 0 0 (335,739) 0 0 0 (349,259) 0 0 0 (362,127) 0 0 0 (374,230) 0 0 0 (385,457) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 20,773 531,162 3,085 2,986 (1,670,416) (338,867) 232,437 0 (1,776,846) (1,825,887) 0 (1,825,887) 219,678,000 439,356,000 $0.00 21,951 812,641 (5,110) (4,786) 23,120 862,051 (5,586) (5,063) 24,272 911,515 (6,082) (5,335) 25,397 960,698 (6,594) (5,598) 26,487 1,009,247 (7,121) (5,851) 27,531 1,056,795 (7,660) (6,090) 28,522 1,102,966 (8,206) (6,314) 29,451 1,147,380 (8,757) (6,521) 30,307 1,189,655 (9,308) (6,708) 31,084 1,229,416 (9,856) (6,874) 32,017 1,266,298 (10,151) (6,852) 441,297 (3,102,629) (3,188,263) 0 (3,188,263) 219,678,000 439,356,000 -$0.01 4.83% 0.00% 0.00% 3.33% DCF Valuations ($000) Company Name Most Recent Fiscal Year End Date of Valuation Cost of Common Equity Terminal Growth Rate Vonage Holding 12/31/2016 4/17/2017 3.44% 3.00% Fiscal Year of Forecast Valuation to Common Equity Free Cash Flow to Common Equity Present Value of FCF Present Value Beyond 10 Years Present Value of First 10 Years Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share Valuation to All Investors Cost of Net Debt Cost of Preferred Stock Cost of Minority Interest After Tax Weighted Average Cost of Capital Free Cash Flow to Debt Present Value of FCF to Debt Value of Debt Free Cash Flow to Preferred Stock Present Value of FCF to Preferred Stock Value of Preferred Stock Free Cash Flow to Minority Interest Present Value of FCF to Minority Interest Value of Minority Interest Free Cash Flows to Investors Present Value of FCF to Investors Entity Value Less Value of Net Debt Less Value of Preferred Stock Less Value of Minority Interest Forecast Equity Value Before Time Adj. Forecasted Value as of Valuation Date Less Value of Contingent Equity Claims Value Attributable to Common Equity Common Shares Outstanding at BS Date Equivalent Shares at Valuation Date Forecast Price/Share 2017/12/31 2018/12/31 (31,892) (30,832) (2,646,969) (230,953) (2,877,922) (2,957,354) 0 (2,957,354) 219,678,000 439,356,000 -$0.01 2019/12/31 2020/12/31 2021/12/31 2022/12/31 2023/12/31 2024/12/31 2025/12/31 2026/12/31 2027/12/31 2028/12/31 (31,626) (29,558) (31,094) (28,094) (30,282) (26,451) (29,180) (24,640) (27,780) (22,678) (26,079) (20,582) (24,078) (18,370) (21,779) (16,064) (19,194) (13,686) (16,334) (11,259) (16,824) (11,211) (3,798) (3,456) (2,813) (2,442) (1,690) (1,399) (427) (337) 974 734 2,510 1,805 4,175 2,863 5,960 3,900 7,857 4,904 9,853 5,867 10,148 5,764 14,971 14,971 14,778 14,778 14,473 14,473 14,054 14,054 13,519 13,519 12,868 12,868 12,103 12,103 11,227 11,227 11,564 11,564 4.83% 0.00% 0.00% 3.33% (4,645) (4,431) 338,867 14,928 15,040 15,057 14,928 15,040 15,057 #N/A Error! cost of preferred stock