General FCFF Discount Model

AGeneralFCFFValuationModel
AnnstageModel
Thismodelisdesignedtovalueafirm,withchangingmargins,revenuegrowth,
andotherparameters.

Assumptions

1.Thefirmisexpectedtogrowatahighergrowthrateinthefirstperiod.

2.Thegrowthratewilldropattheendofthefirstperiodtothestablegrowthrate.

3.Thefreecashflowtoequityisthecorrectmeasureofexpectedcashflowstostockholders.

Theuserhastodefinethefollowinginputs:

1.Lengthofhighgrowthperiod

2.Expectedgrowthrateinearningsduringthehighgrowthperiod.

3.CapitalSpending,DepreciationandWorkingCapitalneedsduringthehighgrowthperiod.

4.Expectedgrowthrateinearningsduringthestablegrowthperiod.

5.Inputsforthecostofcapital.(Costofequity,Costofdebt,Weightsondebtandequity)

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Inputstothemodel

CurrentEBIT= ($1,396.00) (incurrency)

CurrentNetIncome= ($1,667.00) (incurrency)

CurrentDividends= $0.00 (incurrency)

CurrentInterestExpense= $390.00 (incurrency)

CurrentCapitalSpending $4,289.00 (incurrency)

CurrentDepreciation= $1,381.00 (incurrency)

TaxRateonIncome= 35.00% (inpercent)

CurrentRevenues= $3,789.00 (incurrency)

CurrentWorkingCapital= ($110.50) (incurrency)

Chg.WorkingCapital= ($63.00) (incurrency)

CashandNonoperatingassets= $1,477.00

BookValueofDebt= $7,271.00 (incurrency)

BookValueofEquity= $15,807.00 (incurrency)

NOLcarriedforward= $2,075.00

WeightsonDebtandEquity

Isthefirmpubliclytraded? Yes (YesorNo)

Ifyes,enterthemarketpricepershare= $12.57 (incurrency)

&Numberofsharesoutstanding= 886.47 (in#)

&MarketValueofDebt= $7,271.00 (incurrency)

Ifno,doyouwanttousethebookvaluedebtratio? (YesorNo)

Ifno,enterthedebttocapitalratiotobeused= (inpercent)

Enterlengthofextraordinarygrowthperiod= 10 (inyears)

CostsofComponents

Doyouwanttoentercostofequitydirectly? No (YesorNo)

Ifyes,enterthecostofequity= (inpercent)

Ifno,entertheinputstothecostofequity

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Betaofthestock= 2

Riskfreerate= 5.40% (inpercent)

RiskPremium= 4.00% (inpercent)

Enterthecostofdebtforcostofcapitalcalculation 8.90% (inpercent)

EarningsInputs

Pleaseenteryearspecificinputsforeachofthefollowingvariables:

Year GrowthRatein EBITDA/Revenue GrowthRatein GrowthRatein WorkingCapital

Revenue CapitalSpending Depreciation as%ofRevenue

1 0.00% 0% 20% 10% 3.00%

2 30.00% 7.50% 50% 10% 3.00%

3 25.00% 15.00% 50% 10% 3.00%

4 20.00% 22.50% 50% 10% 3.00%

5 10.00% 30.00% 5% 50% 3.00%

6 10.00% 30.60% 5% 50% 3.00%

7 10.00% 31.20% 5% 5% 3.00%

8 8.00% 31.80% 5% 5% 3.00%

9 6.00% 32.40% 5% 5% 3.00%

10 5.00% 33.00% 5% 5% 3.00%

CompoundedAvg 8%

Entergrowthrateinstablegrowthperiod 5.00% (inpercent)

EnterEBITDAas%ofRevenueinstablephase 33.00% (inpercent)

EnterWorkingCapitalas%ofRevenueinstablephase 3.00% (inpercent)

Willthebetachangeinthestableperiod? Yes (YesorNo)

Ifyes,enterthebetaforstableperiod= 1.00

Doyouwanttochangethedebtratiointhestablegrowthperiod? No (YesorNo)

Ifyes,enterthedebtratioforthestablegrowthperiod= 15% (inpercent)

Willthecostofdebtchangeinthestableperiod? Yes (YesorNo)

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 General FCFF Discount Model

Ifyes,enterthenewcostofdebt= 8.00% (inpercent)

CapitalSpendingandDepreciationinStablegrowthperiod
Doyouwanttocomputethereinvestmentrateinstablegrowthfromfundamenta Yes (YesorNo)

Ifyes,enterthereturnoncapitalinstablegrowth= 9%

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Ifno,entercapitalexpendituresas%ofdepreciationinsteadystate: 110% (inpercent:>100%)

Outputfromtheprogram

CostofEquity= 13.40%

Equity/(Debt+Equity)= 60.51%

AftertaxCostofdebt= 5.79%

Debt/(Debt+Equity)= 39.49%

CostofCapital= 10.39%

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1 2 3 4 5

Revenues $3,789.00 $4,925.70 $6,157.13 $7,388.55 $8,127.41

OperatingExpens $3,789.00 $4,556.27 $5,233.56 $5,726.13 $5,689.18

EBITDA $0.00 $369.43 $923.57 $1,662.42 $2,438.22

Depreciation $1,519.10 $1,671.01 $1,838.11 $2,021.92 $1,010.96

EBIT ($1,519.10) ($1,301.58) ($914.54) ($359.50) $1,427.26

EBIT*t $0.00 $0.00 $0.00 $0.00 $0.00

EBIT(1t) ($1,519.10) ($1,301.58) ($914.54) ($359.50) $1,427.26

+Depreciation $1,519.10 $1,671.01 $1,838.11 $2,021.92 $1,010.96

CapitalSpending $3,431.20 $1,715.60 $857.80 $428.90 $450.35

Chg.WorkingCa $0.00 $34.10 $36.94 $36.94 $22.17

FreeCFtoFirm ($3,431.20) ($1,380.27) $28.83 $1,196.58 $1,965.71

PresentValue ($3,073.92) ($1,107.79) $20.73 $770.77 $1,134.36

NOL $3,594.10 $4,895.68 $5,810.22 $6,169.72 $4,742.46

Index 0 0 0 0 0

CostofCapitalComputation

TaxRate 0% 0% 0% 0% 0%

Beta 2.00 2.00 2.00 2.00 2.00

CostofEquity 13.40% 13.40% 13.40% 13.40% 13.40%

CostofDebt 8.90% 8.90% 8.90% 8.90% 8.90%

DebtRatio 39.49% 39.49% 39.49% 39.49% 39.49%

CostofCapital 11.62% 11.62% 11.62% 11.62% 11.62%

Cum.WACC 1.11623 1.24597 1.39079 1.55245 1.73289

GrowthRateinStablePhase= 5.00%

FCFFinStablePhase= $996.92
CostofEquityinStablePhase= 9.40%

Equity/(Equity+Debt)= 60.51%

ATCostofDebtinStablePhase= 5.20%

Debt/(Equity+Debt)= 39.49%

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CostofCapitalinStablePhase= 7.74%

Valueattheendofgrowthphase= $36,362.96

PresentValueofFCFFinhighgrowthphase= $2,446.42

PresentValueofTerminalValueofFirm= $13,470.92

Valueofthefirm= $15,917.34

+CashandMarketableSecurities= $1,477.00

MarketValueofDebt= $7,271.00

MarketValueofEquity= $10,123.34

ValueofOptionsOutstanding(Seeoptionworksheet)= $299.73
ValueofEquityinCommonStock= $9,823.61
ValueofEquityperShare= $11.08

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el

ins,revenuegrowth,

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General FCFF Discount Model

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cent:>100%)

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6 7 8 9 10 TerminalYear

$8,940.15 $9,834.16 $10,620.89 $11,258.15 $11,821.05 $12,412.11

$6,204.46 $6,765.90 $7,307.17 $7,678.06 $7,991.03 $8,316.11

$2,735.68 $3,068.26 $3,313.72 $3,580.09 $3,830.02 $4,096.00

$505.48 $530.75 $557.29 $585.16 $614.41 $645.14

$2,230.20 $2,537.50 $2,756.43 $2,994.93 $3,215.61 $3,450.86

$0.00 $8.84 $964.75 $1,048.23 $1,125.46 $1,207.80

$2,230.20 $2,528.67 $1,791.68 $1,946.71 $2,090.14 $2,243.06

$505.48 $530.75 $557.29 $585.16 $614.41 $645.14

$472.86 $496.51 $521.33 $547.40 $574.77 $1,873.55

$24.38 $26.82 $23.60 $19.12 $16.89 $17.73

$2,238.44 $2,536.10 $1,804.04 $1,965.35 $2,112.90 $996.92

$1,163.02 $1,192.45 $779.62 $784.44 $782.74

$2,512.26 $0.00 $0.00 $0.00 $0.00

0 0 0 0 1

0% 0.35% 35% 35% 35% 35%

1.80 1.60 1.40 1.20 1.00 1.00

12.60% 11.80% 11.00% 10.20% 9.40% 9.40%

8.72% 8.51% 5.43% 5.32% 5.20% 5.20%

39.49% 39.49% 39.49% 39.49% 39.49% 39.49%

11.07% 10.50% 8.80% 8.27% 7.74% 7.74%

1.92468 2.12679 2.31400 2.50541 2.69937

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 Year Revenues EBITDA Depreciation EBIT NOLatbeginningofyear Taxes
1 $3,789 $0 $1,519 $1,519 $2,075 0
2 $4,926 $369 $1,671 $1,302 $3,594 $0
3 $6,157 $924 $1,838 $915 $4,896 $0
4 $7,389 $1,662 $2,022 $359 $5,810 $0
5 $8,127 $2,438 $1,011 $1,427 $6,170 $0
6 $8,940 $2,736 $505 $2,230 $4,742 $0
7 $9,834 $3,068 $531 $2,538 $2,512 $9
8 $10,621 $3,314 $557 $2,756 $0 $965
9 $11,258 $3,580 $585 $2,995 $0 $1,048
10 $11,821 $3,830 $614 $3,216 $0 $1,125
Term.Year $12,412 $4,096 $645 $3,451 $0 $1,208
 EBIT(1t) Capital Expen Depreciation Change in worFCFF
$1,519 $3,431 $1,519 $0 -$3,431
$1,302 $1,716 $1,671 $34 -$1,380
$915 $858 $1,838 $37 $29
$359 $429 $2,022 $37 $1,197
$1,427 $450 $1,011 $22 $1,966
$2,230 $473 $505 $24 $2,238
$2,529 $497 $531 $27 $2,536
$1,792 $521 $557 $24 $1,804
$1,947 $547 $585 $19 $1,965
$2,090 $575 $614 $17 $2,113
$2,243 $1,874 $645 $18 $997

0.41666667
ValuingOptionsorWarrantswhenthereisdilution
Enterthecurrentstockprice= $12.57
Enterthestrikepriceontheoption= 13.375
Entertheexpirationoftheoption= 8.4
Enterthestandarddeviationinstockprices= 50.00% (volatility)
Entertheannualizeddividendyieldonstock= 0.00%
Enterthetreasurybondrate= 6.50%
Enterthenumberofwarrants(options)outstanding= 38
Enterthenumberofsharesoutstanding= 886.47

VALUINGWARRANTSWHENTHEREISDILUTION
StockPrice= 12.57 #Warrantsissued= 38
StrikePrice= 13.375 #Sharesoutstanding= 886
AdjustedS(DONOTENTER)= 12.3775336607 T.Bondrate= 6.50%
AdjustedK(DONOTENTER)= 13.375 Variance= 0.2500
Expiration(inyears)= 8.4 Annualizeddividendyield= 0.00%
Div.Adj.interestrate= 6.50%

d1= 1.0478616087
N(d1)= 0.8526488137

d2= 0.4012760659
N(d2)= 0.3441084415

Valueofthecall= $7.89
NumberofOptions= 38
ValueofOptions= $299.73