Information for Valuation

Note: use the following information solely for the valuation portion of the assignment

In $USD thousands 2021 2022 2023 2024 2025

Depreciation 12,000 12,270 12,834 13,737 14,550

Investment in Fixed

Assets

0 12,000 15,000 10,500 0

After 2025, the firm is expected to grow at a sustainable growth rate of 2.8%.

A/R as a % of sales is 1.5% and A/P as a % of revenue is 1.0%.

A/R in 2020 was $9,825 and A/P in 2020 was $6,549.

Assume no changes in inventory for the purpose of this case.

Required:

1. Using the Financial Modeling Excel template provided, forecast OTR's proforma

income statement to 2025

Input assumptions on the "Facts & Assumptions" tab

Input formulas and cell references on "Forecast IS" tab to calculate

actual net income for 2018 to 2020

o To calculate 2021 - 2025 estimated net income, link to "Facts &

Assumptions" tab for growth numbers, projected margins,

expense inflation, tax rate, etc.

On the "Forecast IS" worksheet, calculate:

o Revenue growth based on the growth assumptions for 2021 -

2025 (use the Margin analysis section of the template)

o Gross profit margin, operating margin, effective tax rate and net

profit margin for 2018 - 2025 (use the Margin analysis section

of the template)

2. Calculate the firm's current WACC under the "WACC tab" template

3. Valuation (use the Base Case information and assumptions and WACC

calculated from Part 2):

Calculate free cash flow to the firm (FCFF)

Calculate the terminal value of the firm using your calculations for

FCFF and your original calculation of WACC

Calculate the value of the firm

Calculate whether the equity of the firm is over or under valued and by

how much