Free Cash Flow Valuation

Income Statement (thousands of US$)

	t = 0
Sales	$872.4
COGS	$418.8
Gross Profit	$453.6
SG&A	$130.9
R&D	$0.4
EBITDA	$322.4
Depreciation	$41.8
EBIT	$280.6
Taxes 30%	$84.17
Net Income	$196.4
	FORECASTS
	1	2	3	4	5
Sales	25.0%	25.0%	25.0%	10.0%	10.0%
COGS	48.0%	47.5%	47.0%	46.5%	46.0%
SG&A	15.5%	16.00%	16.5%	16.5%	16.5%
R&D	0.05%	0.05%	0.05%	0.05%	0.05%
Depreciation	80.0%	85.00%	90.0%	95.0%	100.0%
Capital expenditures (% of Change in Sales)	35.0%	35.0%	35.0%	35.0%	35.0%
Working capital investment (% of Change in Sales)	25.0%	25.0%	25.0%	25.0%	25.0%
discount rate	15%
terminal g	4%

A) Calculate the valuation of the business.

B) What fraction of the business should you be willing to give away in exchange for the funding of $1,000,000?

Answer rating: 100% (QA)

A To calculate the valuation of the business using the free cash flow valuation method we first need ... View the full answer