You are preparing a valuation for a high growth company, Davies Inc. We have collected the following data: o For the last year, revenues were $250M. The balance sheet consists of networking capital of $50M and property plant and equipment of $150M, net. There are no other balance sheet items other than equity and you can assume the capital structure remains all-equity during the accelerated growth period and at graduation. o During the accelerated growth period of 4 years, the company is forecast to perform as follows: (see attached pic)

The company has a cost of equity of 10%. a) What is the graduation value for the company (measured at end of year 4)? b) What is the value of the company today?

Question 1: You are preparing a valuation for a high growth company, Davies Inc. We have collected the following data o For the last year, revenues were $250M. The balance sheet consists of net- working capital of $50M and property plant and equipment of $150M, net There are no other balance sheet items other than equity and you can assume the capital structure remains all-equity during the accelerated growth period and at qraduation. During the accelerated growth period of 4 years, the company is forecast to perform as follows o Accelerated Growth Year 1 Year 2 Year 3 Year 4 Graduation Sales growth Operating margin Tax rate NWVC (% sales) Capex, net (% sales 85% 35% 20% 20% 14% 55% 38% 20% 20% 13% 35% 41% 20% 20% 12% 15% 42% 20% 20% 11% 5% 43% 20% 201 10% The company has a cost of equity of 10% a) What is the graduation value for the company (measured at end of year 4)? b) What is the value of the company today