Example - Enterprise Valuation & Terminal Value Given (You may use your numbers

Question

Example - Enterprise Valuation & Terminal Value Given (You may use your numbers instead!) Gross Margin 40% Fixed Costs $ 2,000 Revenue Growth Rate for Years 1 - 5 10% FCF Steady Growth 3% Discount Rate 12% Year 1 Revenue $ 5,000 Tax Rate 35% Terminal Year 5 1 2 3 4 5 Revenues Gross profits Fixed Costs Net Operating Income Taxes Free Cash Flow NPV for Years 1-5 Cash Flows Terminal Value (as of Year 5) PV of Terminal Value Enterprise Value Terminal Value / Enterprise Value Example - Enterprise Valuation & Terminal Value Given (You may use your numbers instead!) Gross Margin 40% Fixed Costs $ 2,000 Revenue Growth Rate for Years 1 - 5 10% FCF Steady Growth 3% Discount Rate 12% Year 1 Revenue $ 5,000 Tax Rate 35% Terminal Year 5 1 2 3 4 5 Revenues Gross profits Fixed Costs Net Operating Income Taxes Free Cash Flow NPV for Years 1-5 Cash Flows Terminal Value (as of Year 5) PV of Terminal Value Enterprise Value Terminal Value / Enterprise Value

Explanation / Answer

(amount in $)                  1                 2                  3                  4                  5 Revenue          5,000        5,500          6,050          6,655          7,321 Gross Profits          2,000        2,200          2,420          2,662          2,928 Fixed Costs          2,000        2,000          2,000          2,000          2,000 Net Operating Income                 -              200             420             662             928 Taxes                 -                70             147             232             325 Free Cashflow                 -              130             273             430             603 NPV for years 1-5 Cash Flows                 -              104             194             273             342 Terminal Value (as of year 5)                 -                 -                   -                   -               928 PV of terminal value                 -                 -                   -                   -               527 Enterprise Value                 -              104             194             273             869 Terminal value/ Enterprise Value                 -              104             194             273             869

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