1. As a financial analyst, you need to estimate the stock price of a private company, Bauer Corp., using the DCF model. Assume that it is the end of 2018. You are given the income statement and balance sheet for 2018 as well as projections for the next five years. (Your forecast period is 5 years). You already calculated FCFs from 2020 to 2023.

 

	2019 (or Year 1)	2020 (or Year 2)	2021 (or Year 3)	2022 (or Year 4)	2023 (or Year 5)
FCF	??	$121	$0	$131.77	$160

 

You need to calculate the FCF for 2019 and complete the OCF analysis. The relevant information for the analysis is provided here:

 

Income Statement
	2018	2019
Sales	3500	4200
Cost of goods sold	2200	2620
SG&A expense	710	740
Depreciation	110	120
Interest expense	25	70
Interest income	5	10

 

Balance Sheet
	2018	2019
Assets
Cash and equivalents	5	15
Marketable securities	70	90
Accounts receivable	1330	1290
Inventories	560	707
Net property and equipment	11700	12100

 

	2018	2019
Liabilities
Accounts Payable	40	120
Accrued expenses	115	145
Short Term financing	122	89

 

The Corporate tax rate is 25%

After 2023, you expect that the FCF grows at 2% in perpetuity

The appropriate discount rate is 10%

The market value of the firm's total debt is $400

There are 90 shares outstanding.

 

2. What is EBIT in 2019? What is NOPLAT in 2019?

 

3. What is CAPEX in 2019?
 

4. What is NWC in 2018? What is NWC in 2019?

5. What is the FCF in 2019?

6. What is the terminal value (i.e. the PV (as 2023) for all FCFs after 2023)?

7. What is Bauer Corp.'s enterprise value today?

8. Complete Bauer Corp.'s market value balance sheet for 2018:
 

Market Value Balance Sheet
Excess cash & non-operating assets:	Debt:
Operating Assets:	Equity:
Asset Value:	Debt + Equity:

 

9. What is the market value of Bauer Corp.'s equity? What is the stock price per share?

Answer rating: 100% (QA)

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