1. Tanner is a division of diversified company and is involved in providing technology services. In the attached Exam Excel Template file (Sheet Q2), all relevant information needed to estimate the divisional cost of capital and price per share of Tanner has been provided. Specifically, information about peer firms capital structure and betas are provided in order to use the divisional cost of capital method to estimate cost of capital for Tanner. Further, projections for the next five years for the drivers of free cash flows are also provided.

1. Using the divisional cost of capital method, estimate the Weighted Average Cost of Capital (WACC) for Tanner
2. Using the Discounted Free Cash Flow Valuation Methodology, estimate the intrinsic price per share of Tanner.

AutoSaver Fle Home Insert X Cut Copy - Format Panter Parte Clipboard 830 A 1 2 3 4 Assumptions 5 Risk Free Rote 6 Market Risk Premium 7 Tax Rate 8 Number of Shares Outstanding in Millions 9 10 11 Tanner Segment Information 12 Market Value of Debt Outstading- Millions 13 Number of Years Ronds Outstanding 14 Face Value of Debt Outstanding in Millions 13 Coupon Rate Paid Semi-Annually 16 Sales in Most Recent Year in Millions 17 Debt/Equity Ratio for Tanner 18 Debt/Asset Ratio for Tanner 19 Long Run Growth Rate 20 Explicit Forecast Period for Valuation in years 21 Forecast Factors 22 Target Annual Sales Growth over Explicit Forecast Period 23 Projected Operating Margins 24 Cash/Sales 23 Accounts Receivables/Sales 26 Inventory/Sales 27 Net Fixed Assets/Sales 28 Accounts Payable/Sales 29 Accruals/Sales 30 31 33 34 35 36 Ready = A Page Layout Scroll Lock Calibri BIU- Jo 01 02 Type here to search Formula Data Review View Hep 11 11A A &. A- A- Fant === 3. Wap Test ==Merge & Center- ra Alignment M O E S S 4.50% 5.00% 34% 100 300.00 15 $325.00 5% 900.00 0.80 45% 3.00% 5 8.50% 19.00% 3.89% 6.67% 16.67% 44% 8.33% 11.11% D Search Generel H Percent 2 Conditions Formats Normal Formatting Table- Percent 3 Bad 5 % 78 Number Styles C D E Divisional Cost of Capital and Valuation Comparable Firm Information Comparable Peer Firms Novo Disc ITS Ins Morton Technology Income Statement Sales FRIT Interest Taxes Net Income Retained Eamings Balance Sheet Assels Cash Accounts Receivables Inventory Net Fixed Assets Total Assets Accounts Payables Accruals Long Term Debt Common Stock Retained Earnings Total Shareholder Fruity D 99- W P Percent 3 2 Good Percent 4 Neutral F G Debt/Equity Equity bata 0.65 1.4 0.50 1.35 0.80 1.6 Valuation Model for Tanner 1 1 976.50 $ 185.54 $ 37.95 $ 65.10 $ 162.75 $ 434.00 $ 81.35 $ 108.50 $ Most Recent Yea $ $ $ $ $ $ $ $ $ $ $ $ $ A D 900.00 $ 171.00 $ 16.00 52.70 102.30 102.30 35.00 $ 50.00 $ 150.00 $ 400.00 $ 645.00 75.00 $ 100.00 S 325.00 100.00 45.00 145.00 H Insert Delete Format Cels 2 1,059.50 $ 201.31 $ 41.20 $ 70.63 $ 176.58 $ 470.89 $ 88.29 $ 117.72 $ I Adeoys, Temitope AT Autum Hilv Clear- 3 1,149.56 $ 218.42 $ 44.71 $ 75.545 191.59 $ 510.92 $ 95.80 $ 127.73 $ 27 0 Sort & Find & File Sui Editing Share PComments LES Anshme Dala Analysis 4 5 1,247.27 $1,353.29 236.98 $ 257.13 48.51 $ 83.15 $ 207.88 $ 554.34 $ 52.63 90.22 225.55 601.46 103.94 $ 138.59 $ 112.// 150.37 0 - ^ L I 100% 8:07 AM 5/21/2022 400