Time Warner valuation
WACC Inputs		Notes:
Weight of Debt		total debt / enterprise value
Weight of Equity		1 - weight of debt
Cost of Debt	3.50%	most recent bank loan interest or bond yield
Risk-Free Rate	2.31%	long-term governance bond yield				Free Cash Flow Calculation
Beta	1.9	from Bloomberg				EBIT
Market Risk Premium	5.00%	common practice for North America				EBIT(1 - T)
Tax Rate	35.00%	marginal tax rate				Depreciation	$ 669
Cost of Equity		CAPM				CAPEX		change in investments
WACC						WC 2016		working capital in 2016
						WC 2015		working capital in 2015
Assumptions:						FCF 2016
pessimistic growth rate of FCF		Modest rate
optimistic growth rate of FCF		Historic average for 2010-2016
Terminal growth rate		Common practice for North American firms
(in $ millions)	FY 2016	FY 2017E	FY 2018E	FY 2019E	FY 2020E	FY 2021E	FY2022E
FCF (pessimistic guess)
FCF (optimistic guess)
Discount Period		1	2	3	4	5	6
Present Value (pessimistic)
Present Value (optimistic)
Terminal Value (pessimistic)
Terminal Value (optimistic)
Enterprise Value (pessimistic)
Enterprise Value (optimistic)
Net Debt
No. of Shares Outstanding	783.80
Share Price (pessimistic)
Share Price (optimistic)