JAZ Inc. You have been asked to determine whether JAZ Inc. is correctly priced today at $320 per share. To do this you are to use the Corporate Value Model discussed in class to estimate JAZ Inc.s stock price. The companys most current Income Statement, Balance Sheet and related financial details are provided in the Excel file JAZ Inc. Financials. This file also includes a tab with information regarding JAZs monthly closing stock prices over the last five years, along with those of the MSCI ACWI. In completing this project, you will presume that CAPM is correct. You are to assume that the long-term risk-free rate is 4.3% and the long-term market risk premium is 6.8%. As well, all Cash in the firm is to be considered Excess Cash and therefore not included in the consideration of Net Operating Working Capital. You are to complete the project in groups, as approved by your sectional Instructor. You will submit via email to your respective Instructors, (i) an Excel file clearly showing your calculations and conclusions, along with (ii) a separate report in Word or PDF explaining your methods, assumptions and results. This Word/PDF report is to be up to a maximum of 3 pages in length; Times New Roman font size 12 with 1.5 spacing (any exhibits are to be included in a separate Appendix at the end of the document). The submission due date and time is Monday November 14, 2016 at 11:59PM. Any late submissions will result in a very significant penalty to the project mark. In coming to your conclusions, it will be useful to find (i) JAZs Beta (hint Excel SLOPE function is helpful here), (ii) JAZs WACC, (iii) JAZs pro-forma CFFA for each of the years 2017-2021, (iv) JAZs expected Terminal Value for year ending 2021, (v) the PV of all of JAZs future operating cash flows (i.e., of CFFAs for years 2017-2021 and its 2021 Terminal Value), (vi) JAZs total firm value including its Excess Cash (note that you are not being asked to state the firms enterprise value), (vii) JAZs total equity value, and ultimately (viii) JAZs equity price per share. PART A Is JAZ Inc. correctly priced? Would you give a buy recommendation on the firm? If not, what trading strategy would you follow?

JAZ Inc.
For Year Ending November 14, 2016	In 000s
Income Statement
Sales	20,000,000
Costs of goods sold	(15,000,000)
Depreciation	(1,200,000)
Interest payments on debt	(440,000)
Profit before tax	3,360,000
Taxes	(1,176,000)
Profit after tax	2,184,000
Dividends	(1,747,200)
Retained earnings	436,800
As of November 14, 2016	In 000s
Balance Sheet
Cash	2,000,000
Current assets	4,000,000
Fixed assets
At cost	20,000,000
Depreciation	(7,000,000)
Net fixed assets	13,000,000
Total Assets	19,000,000
Current liabilities	3,200,000
Debt	8,800,000
Stock	4,500,000
Accumulated retained earnings	2,500,000
Total Liabilities and Equity	19,000,000
Information for Pro Formas
Annual Sales growth for next 5 years	3%
Current assets/Sales	20%
Current liabilities/Sales	16%
Net fixed assets/Sales	65%
Costs of goods sold/Sales	75%
Depreciation rate	5%
Interest rate on debt	5.00%
Corporate Tax rate	35%
Dividend payout ratio	80%
No interest earned from cash balances
Additional Information
Firm Debt Ratio, D/V (Market Values)	0.2
Post November 14, 2021 Long Term Constant CFFA Growth Rate	0.015	CFFA is expected to stabilize at that point and then continue to grow at 1.5% annually
The Firm's Cost of Debt rD	0.05
The firm has 118 Million Shares Outstanding
No new equity will be issued and no equity will be repurchased
Any shortfall in funds needed will be made up by increasing the firm's longterm DEBT outstanding and any increase in funds generated will go to paying down the firm's longterm DEBT
In other words, the PLUG figure that keeps Assets = Liabilities & Stockholder's Equity is DEBT
All Cash is "Excess Cash" and therefore not part of Net Operating Working Capital
Depreciation Expense for any year is found by multiplying the annual depreciation rate by the average value of Fixed Assets at COST for the year (i.e. average of Beginning and Ending Fixed Assets at Cost)

Closing Prices
Date	JAZ Inc.	MSCI ACWI
1/10/2016	311.39	43.53
2/9/2016	322.44	46.83
1/8/2016	339.04	45.95
1/7/2016	312.99	45.07
2/6/2016	324.78	45.66
1/5/2016	312.55	42.99
1/4/2016	304.13	40.38
3/3/2016	336.37	42.85
3/2/2016	362.1	43.53
2/1/2016	358.69	42.55
2/12/2015	398.79	43.54
1/11/2015	393.62	44.21
1/10/2015	364.03	40.61
3/9/2015	312.64	40.1
1/8/2015	280.98	37.36
1/7/2015	301.22	34.91
3/6/2015	277.69	33.14
1/5/2015	269.2	35.1
1/4/2015	253.81	33.96
1/3/2015	266.49	33.79
1/2/2015	264.27	33
2/1/2015	265.5	33.6
3/12/2014	250.87	30.86
1/11/2014	252.05	28.88
1/10/2014	232.89	26.83
4/9/2014	254.32	35.65
1/8/2014	248.27	34.94
2/7/2014	233.3	33.02
1/6/2014	228.35	33.88
1/5/2014	212.91	33.67
2/4/2014	231.9	36.44
1/3/2014	202.51	36.66
1/2/2014	179.69	35.24
3/1/2014	194.44	32.45
1/12/2013	173.1	32.8
1/11/2013	192.29	33.61
3/10/2013	213.51	33.26
1/9/2013	216.23	30.21
1/8/2013	215.23	34.43
1/7/2013	222.52	35.35
1/6/2013	204.49	37.53
2/5/2013	196.69	37.62
1/4/2013	195.81	35.33
1/3/2013	180.13	36.67
1/2/2013	173.29	35.36
3/1/2013	169.64	34.09
1/12/2012	180	38.8
1/11/2012	175.4	33.92
1/10/2012	165.23	35.71
1/9/2012	157.06	33.08
2/8/2012	124.83	29.78
1/7/2012	117.89	32.14
1/6/2012	109.26	27.29
3/5/2012	125.46	29.53
1/4/2012	137.1	34.51
1/3/2012	135.77	35.95
1/2/2012	118.4	29.86
4/1/2012	125.41	29.44
1/12/2011	134.52	31.67
2/11/2011	135.91	30.35
12/10/2011	118.81	30.28