Construct a DCF analysis and determine the Enterprise Value using the information outlined below. Forecast out five years of projections before using the Multiples Method to calculate Terminal Value. Clearly list out any assumptions you are making and the supporting rationale.

• Assume the Company is privately held

  • 55% of its revenues coming from only two firms

  • Suppliers are very concentrated

  • Revenues growing faster than industry averages and company is currently enjoying margin expansion

• Projections Revenues Gross Margins Operating Margins

  • Current Year: $125,000 40% 20%

  • Projected Year 1: $140,000 40% 21%

  • Projected Year 2: $155,000 41% 22%

  • Projected Year 3: $169,000 41% 22%

  • Projected Year 4: $185,000 42% 23%

  • Projected Year 5: $195,000 42% 24%

• Long-term industry growth rate of 3%

• Depreciation at 9% of Revenues

• Capital Expenditures of 10% of Revenues

• Tax Rate of 25%

• DSO, DIO, and DPO of 50, 80, and 60 days respectively

• Prepaids running 2% of revenues and Accruals running 3% of revenues

• Target Capital Structure of 35% Debt and 65% Equity

• Company pays 5% for its debt

• Risk free rate of 2%, levered beta of 1.0 and market risk premium of 6%

• Use a 360-day year

• Publicly traded comps EV/EBITDA is 14x