Forman B I | Marge & Canter. s-% , a conditional a armble Shees insert bina- For
ID: 2620905 • Letter: F
Question
Forman B I | Marge & Canter. s-% , a conditional a armble Shees insert bina- Fornmanting as Table Styles Delate Format Assume all years' cash flows will grow 4% 11.875% Cost of equity 4.000% terminal growth rate Forecasted years in the future FCFE 1,050 1,092 lll1,136 1,181 1,228 1,277 16,872 0 1 What is the total value of equity? 12 $6,057.69 13 What % of the total equity value is represented by the PV of the Terminal Value? 14 15 By what % does the equity value change if the terminal growth rate increases 1/2 percentage point? 16 17 By what % does the equity value change if the discount rate increases 1/10 percentage point? 18 19 By what % does the equity value change if the terminal growth rate decreases 1,2 percentage point? 20 21 By what % does the equity value change if the discount rate decreases 1/10 percentage point? 23 9.454% WACC 4.000% terminal growth rate 25 26 27 28 $ 5,200 MV debt st Year 0 Forecasted years in the future FCFF1,0003 DCF Method- StudentExplanation / Answer
1.
Totla value of Equity=1092/1.11875+1136/1.11875^2+1181/1.11875^3+1228/1.11875^4+1277/1.11875^5+(1277*(1+4%))/(11.875%-4%)/1.11875^5=13862.69
2.
=13862/69/((1277*(1+4%))/(11.875%-4%)/1.11875^5)=2.0877%
3.
=1092/1.11875+1136/1.11875^2+1181/1.11875^3+1228/1.11875^4+1277/1.11875^5+(1277*(1+4.5%))/(11.875%-4.5%)/1.11875^5-13862.69=701.7999142
4.
=1092/1.11975+1136/1.11975^2+1181/1.11975^3+1228/1.11975^4+1277/1.11975^5+(1277*(1+4%))/(11.975%-4%)/1.11975^5-13862.69=13688.87253-13862.69=-173.81747
5.
=1092/1.11875+1136/1.11875^2+1181/1.11875^3+1228/1.11875^4+1277/1.11875^5+(1277*(1+3.5%))/(11.875%-3.5%)/1.11875^5-13862.69=-618.0114502
6.
=1092/1.11775+1136/1.11775^2+1181/1.11775^3+1228/1.11775^4+1277/1.11775^5+(1277*(1+4%))/(11.775%-4%)/1.11775^5-13862.69=178.2794084