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How do I calculate terminal value for all years? How do I finish year 7 of income statements? How do I calculate: in which PV(Terminal

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How do I calculate terminal value for all years?

How do I finish year 7 of income statements?

How do I calculate:

in which PV(Terminal Value of FCFs in Year 6 and Beyond)

Case 1 - NPV Calculation Company Name: Starbucks Assumptions (Amounts in $ Thousands Unless Otherwise Indicated) Initial Capital Expenditure 9000000 Useful Life of Equipment 1800000 Annual Depreciation Sales in Year 1 30000000 6% Sales Growth through Year 6 Sales Growth Year 6 Onward 0% 2% 72% Free Cash Flow Year 6 Onward Cost of Goods Sold (% of sales) Incremental SG&A Expense Market Research Expense 5000000 500000 Initial Net Working Capital 6000000 Accounts Receivable % of Next Year Sales 15% Inventory % of Next Year COGS 20% Accounts Payable % of Next Year COGS 15% Interest Expense 1000000 Tax Rate 21% Cost of Capital 20% Unlevered Income Statements Sales Year on Year growth Cost of Goods Sold Incremental SG&A Expense Depreciation EBIT Taxes Unlevered Net Income Working Capital Calculations Inventory Accounts Receivable Accounts Payable NWC Level Change in NWC CF from Change in NWC Unlevered Cash Flows Unlevered Net Income Add Back: Depreciation CF from Change in NWC CF from Capital Expenditure Free Cash Flow Terminal Value Discount Factor FCF Present Value NPV Year 0 Year Year Year Year Year Year 7 1 3 6 2 31,800,000 33,708,000 30,000,000 5 37,874,309 6% 6% 6% 21,600,000 5000000 Year 4 35,730,480 6% 6% 22,896,000 24,269,760 25,725,946 27,269,502 5,000,000 5,000,000 5,000,000 5,000,000 1,800,000 1,800,000 1,800,000 1,800,000 2,104,000 2,638,240 3,204,534 40,146,767 40,146,767 6% 0% 28,905,672 28,905,672 5,000,000 5,000,000 1,800,000 1800000 1,600,000 3,804,806 4,441,095 336,000 441,840 554,030 672,952 799,009 932,630 1,264,000 1,662,160 2,084,210 2,531,582 3,005,797 3,508,465 4,335,851 4,335,851 4,320,000 4,579,200 4,853,952 5,145,189 5,453,900 5,781,134 5,781,134 4,500,000 4,770,000 5,056,200 5,359,572 5,681,146 6,022,015 6,022,015 3,240,000 3,434,400 3,640,464 3,858,892 4,090,425 5,580,000 5,914,800 6,269,688 6,645,869 7,044,621 -420,000 334,800 354,888 376,181 420,000 -334,800 -354,888 -376,181 7,467,299 7,467,299 398,752 422,677 422,677 -398,752 -422,677 -422,677 3,508,465 1,264,000 1,662,160 2,084,210 2,531,582 3,005,797 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 420,000 -334,800 -354,888 -376,181 -398,752 1,800,000 -422,677 3,127,360 3,529,322 3,955,401 4,885,788 4,407,045 27,143,265 0.694 0.579 0.482 2,171,778 2,042,431 1,907,504 0.402 0.335 1,771,093 1,636,240 6,000,000 6,000,000 -6,000,000 -6,000,000 -9,000,000 -15,000,000 3,484,000 0.833 -15,000,000 2,903,333 6,704,409

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