Scribd
Upload
95 views2 pages

Calculation of Terminal Value.: TV FCF WACC G

The document calculates the terminal value of a company using a growth rate of 0.75% and the formula: TV = FCF(n+1) / (WACC - g). This results in a terminal value of €42.94 million. It then calculates the net present value of future free cash flows and the terminal value to be €37.46 million. From this, it derives an enterprise value of €37.46 million and equity value of €11.46 million. It then calculates a share price of €4.58 based on the number of outstanding shares and an EBITDA multiple of 7.97x, which is similar to companies in the energy or materials sector.

Uploaded by

Alvaro Ramos Rios
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
95 views2 pages

Calculation of Terminal Value.: TV FCF WACC G

The document calculates the terminal value of a company using a growth rate of 0.75% and the formula: TV = FCF(n+1) / (WACC - g). This results in a terminal value of €42.94 million. It then calculates the net present value of future free cash flows and the terminal value to be €37.46 million. From this, it derives an enterprise value of €37.46 million and equity value of €11.46 million. It then calculates a share price of €4.58 based on the number of outstanding shares and an EBITDA multiple of 7.97x, which is similar to companies in the energy or materials sector.

Uploaded by

Alvaro Ramos Rios
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

8. Calculation of Terminal Value.

The calculation of the Terminal Value is in € m. The value has been calculated using the already
FCF n +1
calculated WACC. We used the formula: TV =
WACC−g

WACC 8.99%
Growth r 0.75%
FCF(n) 3.51
FCF(n+1) 3.54
   
TV 42.94

A growth rate is the reflect of growth industries, which are industries in a specific sector of the
economy that outstand among the others and with continuous innovation they project that they
will keep continuously growing into the future. In the case of companies that are in the
eurozone, no real growth has been shown between the years 2007-2014 (source: OFCE).
Therefore, assuming a low growth rate, like 0.75%, will be wise.
9. Net Present Value.
For the calculation we used the previously calculated values of WACC and Terminal Value.

Net Present Value (€m) Year 2018e 2019e 2020e 2021e 2022e
Free Cash Flow 2.49 2.93 2.97 3.51 42.94
WACC 8.99%
Discount Factor 0.92 0.84 0.77 0.71 0.65
PV of FCF       2.28 2.47 2.29 2.49 27.92

DFCF 37.46 € m.

10. Enterprise Value and Equity Value.


The Enterprise Value will be equal to the Net Present Value of the discounted FCF.

EV 37.46 € m.

The Equity value will be equal to the Enterprise Value minus the Financial Debt.

EQ V 11.46 € m.
11. Share Price.
The Value of the Share Price will be calculated using the Equity Value and the number of
Outstanding Shares.

SV= EQV/ N°Shares


12. EBITDA multiple.
EQ V 11.46
The Multiple is calculated using N°Shares 2.5 the relation between the
Enterprise Value and the Earnings     before Taxes, Depreciation and
Amortization.
SH V 4.58 €.
EV 37.46
EBITDA 4.7
   
EBITDA
x 7.97x

The value of the Multiple is 8x. This value is similar to a company that is in the Energy or
Materials sector. We can assume that the company is located in a relatively risky sector since
the multiple is low. The multiple helps investor to decide whether or not invest in a company,
when the multiple is low the company may be assumed as undervalued and when the ratio is
high the company can be overvalued. A company with low multiple might be more attractive
for an investor to buy shares in.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy