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y4If no, enter the following inputs for financing mix,4Desired debt financing proportion - Capital Spending4Desired debt financing proportion - Working Capital 6Capital spending and Depreciation during Stable GrowthBIs capital spending to be offset by depreciation in stable period?GIf no, enter capital expenditures as % of depreciation in stable growthOutput from the programCost of Equity =*Proportion of Debt: Capital Spending (DR)=)Proportion of Debt: Working Capital (DR)=Current Earnings per share=((Capital Spending - Depreciation)*(1-DR)@Do you want to compute your reinvestment rate from fundamentals?(Return on equity in stable growth periodCurrent Capital Spending/sh =Current Depreciation / share =Current Revenues/ share =Working Capital/ share =Chg. Working Capital/share =-Enter length of extraordinary growth period =
(in years)-Do you want to enter cost of equity directly?No(Yes or No)"If yes, enter the cost of equity =(in percent)-If no, enter the inputs to the cost of equityBeta of the stock =Riskfree rate=
Risk Premium=Earnings Inputs.Do you want to use the historical growth rate?Yes'If yes, enter EPS from five years ago =+Do you have an outside estimate of growth ?#If yes, enter the estimated growth:;Do you want to calculate the growth rate from fundamentals?#If yes, enter the following inputs:Net Income Currently =Interest Expense Currently =Book Value of Debt =Book Value of Equity =Tax Rate on Income=GThe following will be the inputs to the fundamental growth formulation:ROC =D/E =Retention =Interest Rate=EDo you want to change any of these inputs for the high growth period?HIf yes, specify the values for these inputs (Please enter all variables)=Specify weights to be assigned to each of these growth rates:Historical Growth Rate =Outside Prediction of Growth = Fundamental Estimate of Growth =*Enter growth rate in stable growth period?Beta-Will the beta to change in the stable period?*If yes, enter the beta for stable period =0Capital Spending, Depreciation & Working CapitalBDo you want all these items to grow at the same rate as earnings ??If not, enter the growth rates for each of the following items:Capital SpendingDepreciationRevenuesHigh Growth
Stable GrowthDo not enterHDo you want to keep the current fraction of working capital to revenues?1Specify working capital as a percent of revenues:>Do you want to use the current debt ratio as your desired mix?"Change in Working Capital * (1-DR)Current FCFE!Growth Rate in Earnings per shareGrowth RateWeightHistorical Growth =Outside Estimates =Fundamental Growth =Weighted AverageAGrowth Rate in capital spending, depreciation and working capital!Growth rate in capital spending =Growth rate in depreciation =Growth rate in revenues =(Working Capital as percent of revenues =
(in percent)AThe FCFE for the high growth phase are shown below (upto 6 years)
Terminal YearEarnings - (CapEx-Depreciation)*(1-DR) -Chg. Working Capital*(1-DR)Free Cashflow to Equity
Present ValueGrowth Rate in Stable Phase =FCFE in Stable Phase = Cost of Equity in Stable Phase ="Price at the end of growth phase =,Present Value of FCFE in high growth phase =!Present Value of Terminal Price =Value of the stock =Estimating the value of growthValue of assets in place =Value of stable growth =Value of extraordinary growth = Last yearTwo-Stage FCFE Discount Model[This model is designed to value the equity in a firm, with two stages of growth, an initialAperiod of higher growth and a subsequent period of stable growth.AssumptionsL1. The firm is expected to grow at a higher growth rate in the first period.V2. The growth rate will drop at the end of the first period to the stable growth rate.\3. The free cashflow to equity is the correct measure of expected cashflows to stockholders.,The user has to define the following inputs:1. Length of high growth periodB2. Expected growth rate in earnings during the high growth period.Z3. Capital Spending, Depreciation and Working Capital needs during the high growth period.D4. Expected growth rate in earnings during the stable growth period.!5. Inputs for the cost of equity.Inputs to the modelCurrent Earnings per share =
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