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    "question_id": "2383280",
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    "question_creation_date_js": "2024-06-06T18:14:41-04:00",
    "question_creation_date": "Jun 06, 2024 06:14 PM",
    "meta_title": "[Solved] In this assignment you will (company Alph | SolutionInn",
    "meta_description": "Answer of - In this assignment you will (company Alphabet, Inc) Calculate the intrinsic value of Alphabet Inc by conducting a two- | SolutionInn",
    "meta_keywords": "assignment,will,company,alphabet,inc,intrinsic,value,conducting,two-stage,dcf,company-level,valuation",
    "question_title_h1": "In this assignment you will (company Alphabet, Inc) Calculate the intrinsic value of Alphabet Inc by conducting a two-stage DCF company-level valuation analysis, Compare your",
    "question_title": "In this assignment you will (company Alphabet, Inc) Calculate the intrinsic value",
    "question_title_for_js_snippet": "In this assignment you will (company Alphabet, Inc) Calculate the intrinsic value of Alphabet Inc by conducting a two stage DCF company level valuation analysis, Compare your results to the current market capitalization of the company and Perform a sensitivity analysis  The requirements of the assignment are as follows  Calculate the Intrinsic Value of Your Company  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 thisexternal resource  Specify the WACC For the discount value you should use the weighted average cost of capital (WACC)  You can either use the value you calculated from the prior course project assignment or you can use the value generated by the websitewww thatswacc com  Conduct a two stage valuation You can now combine the two items above to estimate a 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  Comparison to Current Market Capitalization  On the Key Statistics page in Yahoo  Finance identify and indicate the Market Capitalization ( market cap )  What does this value represent  Compare the market cap to your calculated value  To compare the market cap from Yahoo  Finance to the firm value you calculated in the previous section above you need to first subtract the value of the debt from your firm value calculation  How does your intrinsic value (less debt) compare to the market cap of the company on Yahoo  Finance  What might account for any differences between these two values  Conduct a Sensitivity Analysis  Vary the following inputs to the two tier valuation model and indicate the new valuation amount and the percentage change from the above  base  case  Free Cash Flows Increase the FCF by 10  Decrease the FCF by 10  Terminal Growth Rate Increase the Terminal Growth Rate from 2 5  to 3 5  Decrease the Terminal Growth Rate from 2 5  to 1 5  WACC Add 2  to the WACC (that is if the WACC is 7 5  make it 9 5 ) Subtract 2  from the WACC (that is if the WACC is 7 5  make it 5 5 ) Observations State your observations from the sensitivity analysis  How important (conceptually) is the terminal growth rate to overall value  How important is the WACC to overall value  (Optional) Conduct an Industry Comparable Valuation Analysis  In chapter 4 we saw how to conduct a stock valuation by the  comparable  methodology  Selecting two of the competitors you identified in the first course project assignment apply this methodology to calculate the value of your company's equity  How do the results compare relative to your intrinsic valuation in part 1 of this assignment and with the listed market capitalization of the company that you found on Yahoo  Finance  i have this problem mostly solved in excel including added the optional comparative  I just wanted to check is my numbers were even close ",
    "question_description": "<img src=\"https:\/\/s3.amazonaws.com\/si.experts.images\/answers\/2024\/06\/666234d0af9b3_080666234d0a0ef8.jpg\" alt=\"image text in transcribed\"> <p>In this assignment you will (company Alphabet, Inc)<\/p><p> <\/p><ul><li>Calculate the intrinsic value of Alphabet Inc by conducting a two-stage DCF company-level valuation analysis,<\/li><li>Compare your results to the current market capitalization of the company and<\/li><li>Perform a sensitivity analysis.<\/li><\/ul><p>The requirements of the assignment are as follows:<\/p><p> <\/p><ol><li><strong>Calculate the Intrinsic Value of Your Company:<\/strong><\/li><li>You will use the two-stage company-level Discounted Cash Flow (DCF) valuation model to calculate the intrinsic value of your chosen company.<\/li><li><em>Calculate the Free Cash Flow based on most recent fiscal year data:<\/em><\/li><\/ol><ul><li>Estimate the free cash flows (FCF) available to the firm. To do this you can use the below formula:<\/li><\/ul><ol><li>FCF = Cash Flow from Operations - Capital Expenditures + Interest * (1 - Tax Rate)<\/li><\/ol><ul><li>The \"Cash Flow from Operations\" and \"Capital Expenditures\" can be found on the Statement of Cash Flows in Yahoo! Finance.<\/li><li>The Interest expense (if any exists) is on the Income Statement.<\/li><li>The Tax Rate can be calculated based on the Tax Expense and Net income (as was performed in the first course project).<\/li><li>For additional details on these calculations please refer to thisexternal resource.<\/li><\/ul><ol><li><em>Specify the WACC<\/em><\/li><\/ol><ul><li><em>For the discount value you should use the weighted average cost of capital (WACC). You can either use the value you calculated from the prior course project assignment or you can use the value generated by the websitewww.thatswacc.com.<\/em><\/li><\/ul><ol><li><em>Conduct a two-stage valuation<\/em><\/li><\/ol><ul><li>You can now combine the two items above to estimate a present value of the firm. You should calculate a high-growth phase value and a terminal value.<\/li><\/ul><ol><li><strong><em>High Growth Phase Value:<\/em><\/strong>For this phase, assume that in years 1 - 3 the Free Cash Flows are growing by 8% annually.<\/li><li><strong><em>Terminal Value:<\/em><\/strong>For this phase assume the FCF grow at a constant growth rate of 2.5%.<\/li><\/ol><ul><li>Calculate the present values of the above phases and add them together for the total present value of the company.<\/li><\/ul><ol><li><strong>Comparison to Current Market Capitalization:<\/strong><\/li><li>On the<strong><em>Key Statistics<\/em><\/strong>page in Yahoo! Finance identify and indicate the<strong><em>Market Capitalization<\/em><\/strong>(\"market cap\"). What does this value represent?<\/li><li>Compare the market cap to your calculated value.<\/li><\/ol><ul><li>To compare the market cap from Yahoo! Finance to the firm value you calculated in the previous section above you need to first subtract the value of the debt from your firm value calculation.<\/li><li>How does your intrinsic value (less debt) compare to the market cap of the company on Yahoo! Finance?<\/li><li>What might account for any differences between these two values?<\/li><\/ul><ol><li><strong>Conduct a Sensitivity Analysis:<\/strong><\/li><li>Vary the following inputs to the two-tier valuation model and indicate the new valuation amount and the percentage change from the above \"base\" case.<\/li><\/ol><ul><li><strong><em>Free Cash Flows<\/em><\/strong><\/li><\/ul><ol><li>Increase the FCF by 10%<\/li><li>Decrease the FCF by 10%<\/li><\/ol><ul><li><strong><em>Terminal Growth Rate<\/em><\/strong><\/li><\/ul><ol><li>Increase the Terminal Growth Rate from 2.5% to 3.5%<\/li><li>Decrease the Terminal Growth Rate from 2.5% to 1.5%<\/li><\/ol><ul><li><strong><em>WACC<\/em><\/strong><\/li><\/ul><ol><li>Add 2% to the WACC (that is if the WACC is 7.5% make it 9.5%)<\/li><li>Subtract 2% from the WACC (that is if the WACC is 7.5% make it 5.5%)<\/li><li>Observations<\/li><\/ol><ul><li>State your observations from the sensitivity analysis. How important (conceptually) is the terminal growth rate to overall value? How important is the WACC to overall value?<\/li><\/ul><ol><li><strong>(Optional) Conduct an Industry Comparable Valuation Analysis:<\/strong><\/li><li>In chapter 4 we saw how to conduct a stock valuation by the \"comparable\" methodology. Selecting two of the competitors you identified in the first course project assignment apply this methodology to calculate the value of your company's equity.<\/li><li>How do the results compare relative to your intrinsic valuation in part 1 of this assignment and with the listed market capitalization of the company that you found on Yahoo! Finance?<\/li><\/ol><p> <\/p><p>i have this problem mostly solved in excel including added the optional comparative. I just wanted to check is my numbers were even close. <\/p><p> <\/p><p><\/p><div><div><div><img src=\"https:\/\/s3.amazonaws.com\/si.experts.images\/answers\/2024\/06\/666234d0eb12c_080666234d0d4af7.jpg\" alt=\"image text in transcribed\"><\/div><\/div><\/div>",
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