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Acme SOL

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19 views6 pages

Acme SOL

cvvvv

Uploaded by

kentkouhdd8x8
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BASELINE PERFORMANCE

Year 0 Year 1 Year 2 Year 3


Year 4 Year 5
EBIT 20.40 26.80 33.40
36.10 37.90
Tax@34% 6.94 9.11 11.36
12.27 12.89 Tax Rate 34% 34.00%
EBIT(1-t) 13.46 17.69 22.04
23.83 25.01
Depreciation 21.50 13.50 11.50
12.50 12.70 Given
OCF 34.96 31.19 33.54
36.33 37.71
DWC -4.00 -4.00 -4.20
-5.20 -6.10 Given
CAPX -10.70 -10.10 -10.40
-11.50 -13.10 Given
FCF 20.26 17.09 18.94
19.63 18.51
Terminal Value 164.21 FCF Growth 2% 2.00%
CF 20.26 17.09 18.94 19.63 182.73
NPV@13.5% 152.91 Unleveraged Rate 13.50%

VALUE CREATION: MARGIN IMPROVEMENT


Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
DEBIT 2.04 2.68 3.34 3.61 3.79 EBIT Increase 10.00%
Tax@34% 0.69 0.91 1.14 1.23 1.29 Tax Rate 34% 34.00%
EBIT(1-t) 1.35 1.77 2.20 2.38 2.50
Depreciation 0.00 0.00 0.00 0.00 0.00 Given
OCF 1.35 1.77 2.20 2.38 2.50
DWC 0.00 0.00 0.00 0.00 0.00 Given
CAPX 0.00 0.00 0.00 0.00 0.00 Given
FCF 1.35 1.77 2.20 2.38 2.50
Terminal Value 22.19 FCF Growth 2% 2.00%
CF 1.35 1.77 2.20 2.38 24.69
NPV@13.5% 18.61 Unleveraged Rate 13.50%

VALUE CREATION: WORKING CAPITAL


Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
EBIT 0.00 0.00 0.00 0.00 0.00
Tax@34% 0.00 0.00 0.00 0.00 0.00 Tax Rate 34% 34.00%
EBIT(1-t) 0.00 0.00 0.00 0.00 0.00
Depreciation 0.00 0.00 0.00 0.00 0.00 Given
OCF 0.00 0.00 0.00 0.00 0.00
DWC 16.30 2.10 Inventories
CAPX 0.00 0.00 0.00 0.00 0.00 Given
FCF 16.30 2.10 0.00 0.00 0.00
Terminal Value 0.00 FCF Growth 2% 2.00%
CF 16.30 2.10 0.00 0.00 0.00
NPV@13.5% 15.99 Unleveraged Rate 13.50%

VALUE CREATION: ASSET SALES


Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
EBIT 0.00 0.00 0.00 0.00 0.00
Tax@34% 0.00 0.00 0.00 0.00 0.00 Tax Rate 34% 34.00%
EBIT(1-t) 0.00 0.00 0.00 0.00 0.00
Depreciation 0.00 0.00 0.00 0.00 0.00 Given
OCF 0.00 0.00 0.00 0.00 0.00
DWC 0.00 0.00 Given
CAPX 9.00 6.90 3.40 0.00 0.00 Asset Sales
FCF 9.00 6.90 3.40 0.00 0.00
Terminal Value 0.00 FCF Growth 2% 2.00%
CF 9.00 6.90 3.40 0.00 0.00
NPV@13.5% 15.61 Unleveraged Rate 13.50%

VALUE CREATION: LONG-RUN GROWTH


Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
EBIT 0.00 0.00 0.00 0.00 0.00
Tax@34% 0.00 0.00 0.00 0.00 0.00 Tax Rate 34% 34.00%
EBIT(1-t) 0.00 0.00 0.00 0.00 0.00
Depreciation 0.00 0.00 0.00 0.00 0.00 Given
OCF 0.00 0.00 0.00 0.00 0.00
DWC 0.00 0.00 0.00 0.00 0.00 Given
CAPX 0.00 0.00 0.00 0.00 0.00 Given
FCF 0.00 0.00 0.00 0.00 0.00 18.51
Terminal Value 64.48 Old Growth 2% 2.00%
CF 0.00 0.00 0.00 0.00 64.48 New Growth 5% 5.00%
NPV@13.5% 34.23 Unleveraged Rate 13.50%

CAPITAL STRUCTURE
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Revolver@7.5% 13.0 0.2 4.8 11.7 20.9 20.0
Bank Loan@8.0% 80.0 60.0 40.0 20.0 0.0 0.0
Sub Debt@9.5% 150.0 150.0 150.0 150.0 150.0 0.0
LT Debt@9.0% 0.0 0.0 0.0 0.0 0.0 140.0
Total Debt 243.0 210.2 194.8 181.7 170.9 160.0 1
Total Equity 64.0 64.7 71.8 84.5 99.9 117.2 3.79688
Total Liabilities 307.0 274.9 266.6 266.2 270.8 277.2

INTEREST TAX SHIELD


Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Tax Shield 7.35 6.48 6.06 5.69 5.38
Terminal Value 119.85
FCF 7.35 6.48 6.06 5.69 125.23
NPV@9.5% 100.24

BASELINE PERF 152.91


INTEREST TAX S 100.24
VALUE CREATIO 18.61
VALUE CREATIO 15.99
VALUE CREATION15.61
VALUE CREATIO 34.23
ACME VALUE 337.59

WACC
Year 0 Year 1 Year 2 Year 3
Year 4 Year 5
EBIT 22.44 29.48 36.74
39.71 41.69 EBIT + 10%
Tax@34% 7.63 10.02 12.49
13.50 14.17 Tax Rate 34% 34.00%
EBIT(1-t) 14.81 19.46 24.25
26.21 27.52
Depreciation 21.50 13.50 11.50
12.50 12.70 Given
OCF 36.31 32.96 35.75
38.71 40.22
DWC 12.30 -1.90 -4.20
-5.20 -6.10 WC+Reduction
CAPX -1.70 -3.20 -7.00
-11.50 -13.10 CAPX+Sale
FCF 46.91 27.86 24.55
22.01 21.02
Terminal Value 250.87 FCF Growth 5% 5.00%
CF 46.91 27.86 24.55 22.01 271.89
NPV@WACC 260.40 WACC 10.81%
2 3 4 5
3.24884 2.71309 2.15029585798817 1.711 2.723963
WACC Calculations
Source of funds
Debt: $ Amt % of funds After-tax cost Weighted cost
Revolving credit @ 7.5% $13 4.20% 0.05 0.21%
Bank debt @ 8.0% 80 26.10% 0.053 1.38%
Subordinated debt @ 9.5% 150 48.90% 0.063 3.08%
Equity 64 20.80% 0.295 6.14%
Total funds 307 100.00% 10.81%

Where from re = 29.5%?


At D/E = 0 we have ra = 13.5%.
At D/E = 1 we have re = 18% = 13.5% + (13.5% - 9.0%) where 9.0 % is borrowing rate at 50% d
At D/E = 4 we have re = 13.5 + 4(13.5% - 9.5%) = 29.5% where 9.5% is borrowing rate at 80% d
is borrowing rate at 50% debt.
is borrowing rate at 80% debt.

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