1. Conduct a Sensitivity Analysis for Google
   1. Vary the following inputs to the two-tier valuation model and indicate the new valuation amount and the percentage change from the above "base" case.
      • Free Cash Flows
        • Increase the FCF by 10%
        • Decrease the FCF by 10%
      • Terminal Growth Rate
        • Increase the Terminal Growth Rate from 2.5% to 3.5%
        • Decrease the Terminal Growth Rate from 2.5% to 1.5%
      • WACC
        • Add 2% to the WACC (that is if the WACC is 7.5% make it 9.5%)
        • Subtract 2% from the WACC (that is if the WACC is 7.5% make it 5.5%)
   2. Observations
      • State your observations from the sensitivity analysis. How important (conceptually) is the terminal growth rate to overall value? How important is the WACC to overall value?

      • FCF	$29,129,252
        WACC	12.00%
        	Year	FCF	PV @12%	Present Value
        Growth rate = 8%	1	$31,380,480	0.8929	$28,018,286.00
        Growth rate = 8%	2	$33,890,918	0.7972	$27,017,633.00
        Growth rate = 8%	3	$36,602,192	0.7118	$26,052,717.00
        Terminal Value	4	$394,918,387.00	0.7118	$281,095,108.00
        			Total firm Value	$362,183,744.00
        Market cap	$958,950,000,000
        Firm Value	$362,183,744.00
        Total debt (mrq)	$16,800,000,000
        Intrinsic value = Firm Value - debt	($16,437,816,256.00)