Student instructions: Use the forecasting variables to complete the discounted free cash tlow forecast and valuation shown below. Enter formulas in the blanks where indicated to compiete the calculations needed. These incremental cash ows would require an initial $9,000,000 equipment investment. Terminal Cash flow would be an inow of $1,000,000 (don't forget to add this in the end AFTER TAXES]. Discount rate is highest Marginal Cost of Capital from the previous tab, but reinvestment rate is 12%. Find NW, ERR, MIRR, and Discounted Payback. orecasting Variables: .ctual Problem: Initial Capital lnvesment Salvage {Terminal} value at the end of 2025 Income tax rate Assumed longterm sustainable growth rate Capital Gains Tax Rate Discount rate Reinvestment rate Sales units growth factor Expected Cost of Goods Sold Price growth Factor (COGS) of Revenues S, G, & A expense % of revenues Depr. 8: Amort. % of Gross Capital Investment Initial Capth lnvesment Salvage (Terminal) value at the end of 2025 Increase in inventory and AR [for A NOWC) 9,000,000 1,000,000 1,500,000 The Discounted Free Cash Flow Model for Total Equity Barking Dog Corporation 9,000,000 1,000,000 30% 5% 20% Use the most expensive WACC 12% 2022 2023 2024 2025 5% 10% 15% 20% ?% ?'% 7% ?% 60% 50% 45% 40% 10% 10% 10% 10% MACRS 3 Year Depreciation {spread over 4 years} 33.33% 44.45% 14.8 1% 141% Increase in inventory and AR (for A NOWC) 1,500,000 Increase in accruals and AP (for A NOWC) 1,000,000 Income tax rate 30% Assumed long-term sustainable growth rate 6% Discount rate 14.95% Use the most expensive WACC from previous tab Discounted Free Cash Flow Model Barking Dog Corporation Years Ending December 31 Operating Cash Flow Actual Base Yr |- -Forecast 2021 2022 2023 2024 2025 Total unit sales 1,000,000 Price $6 Total Revenues $6,000,000 Cost of Goods Sold Gross profit Selling, general and administrative expenses 10% Revenues Earnings before interest, taxes, depr. & amort. (EBITDA) Depreciation and amortization usine MACRS Earnings before Interest and taxes (EBIT) No Interest payments now Federal and State Income Taxes (30%) Net Operating Profit After-Tax (NOPAT = EBIT - Tax) Add Back DepreciationDepreciation and amortization usine MACRS Earnings before Interest and taxes (EBIT) No Interest payments now Federal and State Income Taxes (30%) Net Operating Profit After-Tax (NOPAT = EBIT - Tax) Add Back Depreciation (EBIT - Tax) + Depreciation (Free Cash flows for the years) At termination of the project: Sale of Fixed Asset, 2025 1,000,000.00 Capital Gain/Loss Tax Liability (Capital Gains tax of 20%) FCF from termination of project Recover A NOWC Annual Free Cash Flow from above Discount rate from WACC sheet 14.95% NPV IRR MIRR At Reinvestment Rate of 12% Discounted Payback Present Value of Free Cash Flows + ANOWC @ WACC Net Cumulative Discounted Free Cash Flow Discounted Payback