Basic DCF ModelDiscounted Cash Flow ValuationCAPM ModelMarket AssumptionsValuation ModelKe=rf+B(rm-rf)Risk Free Rate3.50%Market Risk Premium5.50%Calendar YearYearGrowth RateFCF (SM)Terminal ValueTotalPresent Value2013010.00%100100WACC=E/MV*Ke+D/MV*Kd(1-t)Equity Assumptions201415.00%110110101.41Beta1.00201525.00%11611698.17Cost of Equity9.00%201635.00%12112195.03PV of Growing PerpetuityMV of Equity est(SM)2,000.00201745.00%12712791.99Vi=CF t+1=CFt(1+g)201855.00%13413489.05k-gk-gDebt Assumptions201963.00%1402,6442,7851,709.95Pre-Tax Cost of Debt4.50%Effective Tax Rate30.00%PV0=FVtAfter-Tax Cost of Debt3.15%(1+k)'tMV of Debt est (SM)200.00Firm Value2,185.61

Firm AssumptionsDebt Value200.00Firm Value est(SM)2,200.00Equity Value1,985.61Debt-to- MV Ratio9.09%Shares Outstanding100.00WACC8.47%Initial Cash Flow100Intrinsic Value/Share19.86Long-Term ( Terminal Growth Rate)3.00%Market price/Share

Analysis of Historical FCF DataSM% Change20092010201120122013

Average Cash FlowGeometric Average Growth Rate

Real Model

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