Revenue (fiscal year [FY] 2016):a $19,693.33

Net income (FY 2016):a $1,258.67

Annual revenue growth rate:b 35% (FY 2017E), 30% (FY 2018E, FY 2019E), 25% (FY 2020E) and 20% (FY 2021E)

Net income/revenue (%):b 10% (FY 2017E), 5% (FY 2018E), 1% (FY 2019E), 5% (FY 2020E), and 10% (FY 2021E)

Tax rate:c 25% (FY 2016 to FY 2021E)

Depreciation and amortization as a percentage of revenue:d 16.7% (FY 2017E to FY 2021E)

Investment in fixed capital as a percentage of revenue:d 25.4% (FY 2017E to FY 2021E)

Investment in working capital as a percentage of net income:d 37.5% (FY 2017E to FY 2021E)

Weighted average cost of capital (WACC):b 9.50%

Terminal growth rate after FY 2021E:b 3.75%

Number of diluted shares outstanding (FY 2016):e 19,843.51

Debt (FY 2016):b $13,767.00

Excess cash (FY 2016):f $0

Terminal EV/EBITDA (FY 2022E):b 25X

Terminal EBITDA (FY 2022E):b $22,500 EBITDA (FY 2017E):b $1,715

Book value of equity (FY 2017E):b $105,000

Notes:

a: Annualized estimates based the nine months ended July 31, 2016 in Exhibit 2.

b: Estimated by the case authors.

c: Effective tax rate in Saskatchewan, according to CanniMed Therapeutics Inc., Prospectus, 53.

d: Estimates by the authors based on average values of FY 2015 and FY 2016.

e: According to CanniMed Therapeutics Inc., Prospectus, 18.

f: The authors assume that no excess cash will be added back to the implied equity value given CMED was in a working capital deficit and needed all of the capital to fund future growth.

E = estimate; EV = enterprise value;

EBITDA = earnings before interest, taxes, depreciation, and amortization Source:

Prepared by the case authors based on case information.

a) Incremental CF table to obtain the FCF and NPV

b) Based on the DCF method, what should be the share price of CMED?