Question

Can you please explain the highlighted equation, how did we came up with the answer in details?

Blue Scholar Learning, Inc. (BSL) 5-year Financial Projection (s millions) Actual 2010 2012 2011 2013 2014 2015 Income Statenent Net sales Cost of sales Gross income Depreciation Interest expense Operating expenses Net incone before tax Provision for taxes Net incone after tax Balance sheet Total current assets Gross property and equipnent Accumulated depreciation $ 3,138 1,087 2.e51 1, ee9 142 334 566 221 345 $1,996 644 1,352 492 171 212 477 186 $ 291 $ $2.267 742 1,52 785 178 239 323 126 197 $2,588 830 1,67 1,61 $ 3,571 1,241 2.330 917 118 174 $2,827 959 1,301 175 191 306 86 34 52 $ 156 61 95 929 363 566 1,412 6,410 2,714 3,696 1,069 6,177 1,923 8,200 5,824 3,176 1,9 6,168 117 585 223 174 1,099 966 2,179 9,016 5,941 1,121 4,188 868 3,312 1, 069 5,502 104 335 41 86 566 1,694 335 2,987 $5,502 1,234 5,149 1,654 3,495 1,069 5,798 1,650 7,449 4,e15 3,434 1, 069 6,153 tate Net property and equipnent Goodwill Total assests Accounts payable Short-tern debt Current portion long-term debt Accrued expenses Total current liabilities Long-tern debt Deferred taxes Shareho lders' equity Total Liabiuties and equity 6.323 135 393 267 168 11e 814 200 134 1.258 482 140 97 796 1,554 334 3,104 $5,798 842 165 120 1,218 1,389 378 3,200 $6,177 963 699 496 4,165 1,189 a54 3.252 $6.153 sas 3.50 $6.168 $ 490 $ (130) S Free cash f Lows 215 464 MC Qu. 22 Use BSL's actual financial data for. Use BSLS actual financial deta for 2010 and s projections for 201 to 2015 as shown above. Estimate the present value of eSL tee cash fow nS milions for the years 2011 to 201s. The WACC of the acquiring firm (Macklemorej is 80 percent, BSL WACC is S percent, and the average of the two companies WACCA, weighted by sales, is 82 percent NOTE to instructor. for this question, you migit choose to include the FCF for 2011 of -57 in the last row of the table above) Tow 501-0.39) + 785- 969-129-$7. Thus, 2011 Free c References PVO 1.5% (FCFS, 2011-2015) - 562879 PIC•COLLAGE The fundamental principle is that the discount rate should reflect the riske

Answer 1

Answer:

Year free cash flow ($) Present value factor(PVF) (1/(1+.115)ⁿ) Present value($)(FCF * PVF)

2011 (7) 0.897 (6.279)

2012 (130) 0.804 (104.52)

2013 215 0.721 155.015

2014 464 0.647 300.208

2015 490 0.580 284.2

628.79