Please see the attached three stage DCF assignment. Using assumptions derived from your company (RENAME IT DVC CONCRETE), complete the assignment by calculating the values highlighted in yellow. What does each value mean?

Rename it when complete to DVC.

Introduction to the Discounted Cash Flow Model One method an investor could use to determine the value of a company involves conducting a discounted cash flow analysis. An example of a series of assumptions an investor could use to calculate a companies intrinsic value under the Three-Stage DC 1: an initial cash flow (2005) of $2,500,0000 2: a discount rate of 10.15% (the user should insert his required return here) 3: cash flows grow at a 5.65% rate for the first 5 years, a 7.85% rate for the next 5 years, and a 8.75% rate for the final 5 year p 4: the investor uses a terminal growth rate of 2.25% 5: the company has 2,100,000 shares outstanding and pays no dividends. Boxes that are highlighted in black are where users can plug in their own assump Discounted cash flow (DCF) As the name implies, a company's future cash flows are discounted back to the present to derive a DCF Model is certainly not a perfect valuation tool (as it is very difficult to predict what a company will grow its cash flows at that, when combined with all the other components of a user's research on a company, can help give an idea of what a company that the Intrinsic Value that is produced is only as good as the numbers put into the model. If you assume unrealistic growth ra unrealistic intrinsic value. The investor should think of the Intrinsic Value figure given in this light: you need to pay the price return (i.e. the discount rate) on your investment if your assumptions are correct. Some issues to think about when applying the DCF Model: Limitations of DCF Models: You can only use a short period interval like 5 years to obtain a meaningful forecast. Terminal Value: The PV of the all the companies future cash flows. Terminal Value Growth Rate: The rate that you expect the company to indefinitely grow its cash flows by. Discount Rate: The investors required rate of return. NOTE: (If your growth rate is higher than your discount rate, the mo Assignment: Use your own asssumptions for the company you work for to perform the three stage analysis in this assignment. Please provide a brief explanation of how you derived your assumptions How realistic are your results? ed Cash Flow Model g a discounted cash flow analysis. nsic value under the Three-Stage DCF, for example, are: nd a 8.75% rate for the final 5 year period sers can plug in their own assumptions unted back to the present to derive a valuation for the company in question. The company will grow its cash flows at), but it can provide one estimate of value help give an idea of what a company is worth. The user should also keep in mind If you assume unrealistic growth rates (or terminal value), you will get an his light: you need to pay the price given, or lower, in order to achieve a given a meaningful forecast. cash flows by. er than your discount rate, the model will not function properly) ysis in this assignment. Company Name Here Initial Cash Flow: $2,500,000 Growth Rate: Years: 1-5 5.65% Terminal Growth Rate: 2.25% Shares Outstanding: 2,100,000 Debt Level: $2,500,000 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Flows 2,641,250 2,790,481 2,948,143 3,114,713 3,290,694 3,549,014 3,827,611 4,128,079 4,452,133 4,801,625 5,221,767 5,678,672 6,175,556 6,715,917 7,303,560 Terminal Year $7,467,890 6-10 7.85% 11-15 8.75% Discount Rate: Growth 5.65% 5.65% 5.65% 5.65% 5.65% 7.85% 7.85% 7.85% 7.85% 7.85% 8.75% 8.75% 8.75% 8.75% 8.75% Value $2,397,867 $2,299,906 $2,205,947 $2,115,826 $2,029,388 $1,987,013 $1,945,523 $1,904,899 $1,865,124 $1,826,179 $1,802,968 $1,780,052 $1,757,428 $1,735,091 $1,713,038 PV of Year 1-15 Cash Flows: $29,366,247 Terminal Value: $22,171,920 Total PV of Cash Flows: $51,538,167 Number of Shares: Intrinsic Value: 2,100,000 $23.35 10.15%