On January 1, 2013, Stephen Elop, CEO and President of Nokia needs your help. After weeks of negotiations, he has finally agreed to take over Siemens 50% share of their Joint Venture Nokia Siemens Networks (NSN), a globally operating telecommunications equipment provider. But how much should Nokia pay for the transaction?

- NSNs total sales as of 2012 have been recorded at USD 13,372 million. Cost of goods sold had been 75% of total sales. If fully consolidated under the Nokia umbrella, Elop expects that he can reduce COGS to 66% of sales within a 5 year horizon. Other operating expenses are expected to remain at 30% of total sales. Depreciation is expected to be constant, and account for 2% of total sales. Net working capital has been increased by USD 984 million in 2012.

- Elop expects that he will be able to reduce net working capital by 10% each year for the next 5 years until it is in a steady state and will not change thereafter. Net investments in fixed assets are scheduled to be USD 300 million in 2013, USD 200 million in 2014 and 2015, and USD 150 million thereafter. Tax consultants estimate that NSNS tax rate is 30%. As of 2012, NSN has debt outstanding with a market value of USD 7,958 million. It pays an interest rate of 4% on a face value of USD 8,000 million of debt outstanding.

- The beta of NSNs debt is 0.23. NSNs target debt-to-value ratio is 55 percent. As of today, a zero coupon government note maturing on Jan 1, 2017, is trading at 79.65. The expected return of the market portfolio is 13.82%.

Elop asks you to produce an estimate of the value of Siemens 50% share in NSN using the WACC method. Use a 5 year forecast horizon and terminal value after that.