To answer this question, value Graham Holdings as of December 31, 2016 using all the data provided in the previous 2 questions (Files: GHC Free Cashflow Data, GHC Assumptions) assuming all cash flows come at year end. Assume a WACC of 8.00%.

Question: What is the equity value using the FCFF (unlevered DCF) approach? Use exact dates and assume calendar year (January 1-December 31) and an ACTUAL/ACTUAL month/year basis.

Answer Selection

3,273,512.20

3,721,753.20

4,079,691.20

4,527,932.20

5,983,730.90

Free cash flow buildup 12/31/2014 12/31/2015 12/31/2016 Fiscal year end date Select Income Statement Data Revenue COGS, SG&A and other operating expenses Interest income Interest expense Nonrecurring non-operating income (expense) Provision for Income Taxes Memo: Depreciation & amortization (included in COGS, SG&A and other operating expenses) 2,737,032.00 2,504,312.00 2,136 35,533 778,010 312,300.00 2,586,114.00 2,666,939.00 1,909.00 32,654.00 -8.623.00 20,500.00 2.481,890.00 2,178,356.00 3,093.00 35,390.00 -12,642.00 81,200.00 249.457.00 428,437.00 92,894.00 Fiscal year end date Cash and equivalents Investments in marketable equity securities Working capital assets Intangible assets (including goodwill) PP&E 12/31/2015 774,952.00 379,445.00 706,325.00 1,146,589.00 231,123.00 12/31/2016 670,816.00 448,241.00 752,289.00 1,296,919.00 233,664.00 Working capital liabilities Current portion of long-term debt Long-Term Debt 928,429.00 0 399,800.00 1,008,743.00 6,128.00 485,719.00 12/31/2015 12/31/2016 Fiscal year end date Cash flows from investing activities Capital expenditures and purchases of intangible assets Common dividends 237,292.00 68,114.00 136,859.00 53,721.00 66,612.00 27,325.00 Assumptions, DCF valuation for Graham Holdings Growth of EBIAT(1) through 2021 Nonrecurring non-operating income/expense) 2017-2021 Growth of every other income statement item through 2021 Growth of cash and equivalents, marketable securities, working capital assets and liabilities, debt (current and long term) through 2021 Growth of common dividends through 2021 Capital expenditures and purchases of intangibles in 2017 (2) Growth of capital expenditures, intangible purchases 2018-2021(2) Terminal growth rate 5% 0% 5% 5% 5% Average of 2014-2016 5% 3% (1) Operating income x (1-tax rate) (2) Assume no asset sales for PP&E or intangible assets Free cash flow buildup 12/31/2014 12/31/2015 12/31/2016 Fiscal year end date Select Income Statement Data Revenue COGS, SG&A and other operating expenses Interest income Interest expense Nonrecurring non-operating income (expense) Provision for Income Taxes Memo: Depreciation & amortization (included in COGS, SG&A and other operating expenses) 2,737,032.00 2,504,312.00 2,136 35,533 778,010 312,300.00 2,586,114.00 2,666,939.00 1,909.00 32,654.00 -8.623.00 20,500.00 2.481,890.00 2,178,356.00 3,093.00 35,390.00 -12,642.00 81,200.00 249.457.00 428,437.00 92,894.00 Fiscal year end date Cash and equivalents Investments in marketable equity securities Working capital assets Intangible assets (including goodwill) PP&E 12/31/2015 774,952.00 379,445.00 706,325.00 1,146,589.00 231,123.00 12/31/2016 670,816.00 448,241.00 752,289.00 1,296,919.00 233,664.00 Working capital liabilities Current portion of long-term debt Long-Term Debt 928,429.00 0 399,800.00 1,008,743.00 6,128.00 485,719.00 12/31/2015 12/31/2016 Fiscal year end date Cash flows from investing activities Capital expenditures and purchases of intangible assets Common dividends 237,292.00 68,114.00 136,859.00 53,721.00 66,612.00 27,325.00 Assumptions, DCF valuation for Graham Holdings Growth of EBIAT(1) through 2021 Nonrecurring non-operating income/expense) 2017-2021 Growth of every other income statement item through 2021 Growth of cash and equivalents, marketable securities, working capital assets and liabilities, debt (current and long term) through 2021 Growth of common dividends through 2021 Capital expenditures and purchases of intangibles in 2017 (2) Growth of capital expenditures, intangible purchases 2018-2021(2) Terminal growth rate 5% 0% 5% 5% 5% Average of 2014-2016 5% 3% (1) Operating income x (1-tax rate) (2) Assume no asset sales for PP&E or intangible assets