Example 1

t
revenue
cost of revenue
R&D expense
other expenses
depreciation
capital expenditure
net income
net income after tax
FCF
present value
CFs
risk
Components
PV

t
CFs
risk
Components
PV

t
CFs
risk
Components
PV

50% Growth rate

0
1
2
3
4
16.6
24.9
37.35
56.025
84.0375
1.7264
2.5896
3.8844
5.8266
8.7399
6.1088
9.1632
13.7448
20.6172
30.9258
13.4294
18.8991 26.48115 36.92048 51.17884
0.913
1.3695
2.05425 3.081375 4.622063
7.6028 10.67795 14.92755 20.75726
28.6848
-5.5776
-7.1214
-8.8146 -10.42065 -11.4291
-3.681216 -4.700124 -5.817636 -6.877629 -7.543206
-10.371016 -14.00857 -18.69094 -24.55352 -31.60594

5
126.0563
13.10985
46.3887
70.46544
6.933094
39.35056
-10.8408
-7.15495
-39.5724

6
189.0844
19.66478
69.58305
96.24395
10.39964
53.51088
-6.80704
-4.49264
-47.6039

100
10%
90.90909

100
10%
82.64463

100
10%
75.13148

100
100
100
10%
10%
10%
68.30135 62.09213 56.44739

1
100
13%
88.49558

2
100
13%
78.31467

3
100
13%
69.30502

4
5
6
100
100
100
13%
13%
13%
61.33187 54.27599 48.03185

1
100
7%
93.45794

2
100
7%
87.34387

3
100
7%
81.62979

4
5
6
100
100
100
7%
7%
7%
76.28952 71.29862 66.63422

1
107.5
8.5%
99.07834

2
107.5
8.5%
91.31644

3
107.5
8.5%
84.16262

4
5
107.5
107.5
8.5%
8.5%
77.56924 71.49238

1
107.5
10.0%
97.72727

2
107.5
10.0%
88.84298

3
107.5
10.0%
80.76634

4
5
6
107.5
107.5
107.5
10.0%
10.0%
10.0%
73.42395 66.74904 60.68095

1000

837.2127

1210.7074

Application 1: Valuing a straight bond

t
CFs
risk
Components
PV
t
CFs
risk
Components
PV

6
107.5
8.5%
65.8916

1186.8453
0

1057.0456

% change in price
t
CFs
risk
Components
PV
% change in price

Example 2 (using solver)

risk
t
CFs
risk
Components
PV

risk
t
CFs
risk
Components
PV

Example 3
risk
t
CFs
risk
Components
PV

Example 4
risk
t
CFs
risk
Components
PV

-10.94%
0

1
107.5
7.0%
100.4673

2
107.5
7.0%
93.89466

3
107.5
7.0%
87.75202

4
5
6
107.5
107.5
107.5
7.0%
7.0%
7.0%
82.01124 76.64601 71.63179

1
90
10.91%
81.14567

2
90
10.91%
73.16243

3
90
10.91%
65.96461

4
5
90
90
10.91%
10.91%
59.47491 53.62368

1
90
7.08%
84.04771

2
90
7.08%
78.48908

3
90
7.08%
73.29808

4
5
6
90
90
90
7.08%
7.08%
7.08%
68.45039 63.92332 59.69565

1
100
10.25%
90.70295

2
100
10.25%
82.27025

3
100
10.25%
74.62154

4
5
6
100
100
100
10.25%
10.25%
10.25%
67.68394 61.39133 55.68374

1
100
7.50%
93.0218

2
100
7.50%
86.53056

3
100
7.50%
80.49229

4
100
7.50%
74.87538

1341.5468
13.03%

10.91%
0

6
90
10.91%
48.3481

887
887

7.08%
0

1134.2
1134.2

10.25%
0

984.80218

7.50%
0

1135.9

5
1150
7.50%
800.98

1135.9

Amortization
EMI
risk
t
CFs
risk
Components
PV

277409.73
12.00%
0

1
277409.7
12.00%
247687.3

2
277409.7
12.00%
221149.3

3
277409.7
12.00%
197454.8

Beg balance Interest

1000000.00 120000.00
842590.27 101110.83
666291.37 79954.96
468836.60 56260.39
247687.26 29722.47

EMI
277409.73
277409.73
277409.73
277409.73
277409.73

Principal
back
157409.73
176298.90
197454.77
221149.34
247687.26

4
5
277409.7 277409.7
12.00%
12.00%
176298.9 157409.7

1000000
1000000

Year
1
2
3
4
5

End
Balance
842590.27
666291.37
468836.60
247687.26
0.00

7
283.6266
29.49716
104.3746
130.1846
15.59946
71.99388
3.970772
2.620709
-53.7737

8
425.4398
44.24574
156.5619
174.0049
23.39919
95.58215
27.22815
17.97058
-54.2124

9
638.1598
66.36862
234.8428
229.0994
35.09879
124.7602
72.75021
48.01514
-41.6463

10
957.2396
99.55292
352.2642
295.7871
52.64818
159.2209
156.9873
103.6116
-2.96106

11
1435.859
149.3294
528.3963
371.8876
78.97227
196.9521
307.2739
202.8008
84.82101

12
2153.789
223.9941
792.5944
450.1419
118.4584
232.6092
568.6004
375.2762
261.1254

100
100
100
1100
10%
10%
10%
10%
51.31581 46.65074 42.40976 424.0976

7
8
9
10
100
100
100
1100
13%
13%
13%
13%
42.50606 37.61599 33.28848 324.0472

7
8
9
10
100
100
100
1100
7%
7%
7%
7%
62.27497 58.20091 54.39337 559.1842

7
8
9
10
11
12
107.5
107.5
107.5
107.5
107.5
107.5
8.5%
8.5%
8.5%
8.5%
8.5%
8.5%
60.72958 55.97197 51.58707 47.54568 43.82091 40.38793

7
8
9
107.5
107.5
107.5
10.0%
10.0%
10.0%
55.1645 50.14954 45.59049

13
14
15
107.5
107.5
1107.5
8.5%
8.5%
8.5%
37.2239 34.30774 325.7599

10
11
12
13
14
15
107.5
107.5
107.5
107.5
107.5
1107.5
10.0%
10.0%
10.0%
10.0%
10.0%
10.0%
41.4459 37.67809 34.25281 31.13892 28.30811 265.1267

7
8
9
10
11
12
13
14
107.5
107.5
107.5
107.5
107.5
107.5
107.5
107.5
7.0%
7.0%
7.0%
7.0%
7.0%
7.0%
7.0%
7.0%
66.9456 62.56598 58.47288 54.64755 51.07248 47.73129 44.60868 41.69035

7
8
9
10
90
90
90
1090
10.91%
10.91%
10.91%
10.91%
43.59154 39.30294 35.43626 386.9499

7
8
9
10
90
90
90
1090
7.08%
7.08%
7.08%
7.08%
55.74758 52.06062 48.61751 549.8701

7
8
9
10
100
100
100
1100
10.25%
10.25%
10.25%
10.25%
50.5068 45.81115 41.55207 414.5784

15
1107.5
7.0%
401.409

1000000