Task 3: WACC As part of the financial due diligence, the enterprise value and the equity value of an issuer are to be determined using the discounted cash flow method (WACC) as a basis for subsequent pricing. The business plan shows the following free cash flow planning: Year 1 2 3 in million 20 22 26 The perpetuity (year 4 and following), has an annual free cash flow (FCF) of 30 million. In addition, a growth rate of 2,25% is expected. Non-operating assets will be sold at the end of year 2 with a surplus of 18 million. The market value of the debt capital (net debt) is 490 million. According to the target capital structure, the planned equity ratio is 30%. In addition, further information is available: Risk-free premium rate 3,5%, cost of debt 8%, corporate tax rate 35%, market yield 10%, beta 0,8 Task 4: WACC Calculate the equity value using the WACC method according to the following information: Plan years from the business plan - Free cash flow: Year 1 125 million Year 2 130 million Year 3 140 million The FCF of the last year forecast in the business plan is used as the FCF for the perpetuity (from plan year 4) and an annual growth rate of 1,1% is assumed. The non-operating assets are sold after two years with a surplus of 120 million. The following information is also available: - Net debt 755 million - Risk-free premium rate 1,2% - Market yield 7,8% - Cost of debt 2,6% - Corporate tax rate 35% - Beta 0.9 - Planned target market capital structure of equity ratio 28%