Use the bullish case assumptions for this DCF question. Third, estimate the terminal value of the firm using the steady state growth model (terminal value = Steady State FCF/(WACC Revenue Growth Rate)). Assume the 2015 growth, margin and turnover rates in Exhibit 8 are also the steady state rates to project the Steady State FCF. Use the previously calculated WACC in 2011. The steady state Revenue Growth Rate is equal to the 2015 revenue growth rate. The calculated terminal value of the firm is _________.

$1,100

$1,327

$1,124

$1,111

Use the bullish case assumptions for this DCF question. Calculate the enterprise value of the firm using the discount present value of the projected FCF and terminal value.

$1,100

$1,124

$1,119

$1,111

Use the bullish case assumptions for this DCF question. Calculate the implied share price using the enterprise value, the book value of debt and number of shares outstanding in 2011 in the case.

23.08

24.51

22.29

18.67

Considering the share price you calculated in the bullish case, is the American Greetings share price overvalued, undervalued or fairly valued?

Overvalued

Undervalued

Fairly valued

Use the bearish case assumptions for this DCF question. First, estimate the net operating profit after tax (NOPAT) forecast for 2012, 2013, 2014, and 2015. Revenue Growth and Operating Margin are provided in Exhibit 8. Use a tax rate of 39%. The NOPAT is $82 in 2012, $____ in 2013, __________ in 2014 and ____________ in 2015.

$82 in 2013, $82 in 2014 and $82 in 2015

$69 in 2013, $58 in 2014 and $48 in 2015

$82 in 2013, $81 in 2014 and $80 in 2015

$72 in 2013, $61 in 2014 and $51 in 2015