1. How do I find the Present Value of the Cash flows (highlighted cells)? B C...

Question

Question

1. How do I find the Present Value of the Cash flows (highlighted cells)?

B C H K L. Today 9488.80 2 Assumptions 3 Revenue growth(%) 4 COGS/Sales(%) 5 S&A/Sales(%) 6 Tax Rate(%) 7 Current assets/Sale

Answer 1

Answer #1

	Calculation of present value of FCF
	Year	1	2	3	4	5	6	7	8	9	10
a	FCF as given	258.7907	578.0873	680.0326	754.7689	887.6923	975.8724	1,262.7903	1,338.5577	1,469.7497	1,557.9347
b	Present value of cashflows @6.54%	242.90	509.29	562.33	585.82	646.69	667.29	810.48	806.37	831.05	826.84
c	Workings for b	(258.7907)/1.0654^1	(578.0873)/1.0654^2	(680.0326)/1.0654^3	(754.7689)/1.0654^4	(887.6923)/1.0654^5	(975.8724)/1.0654^6	(1262.7903)/1.0654^7	(1338.5577)/1.0654^8	(1469.7497)/1.0654^9	(1557.9347)/1.0654^10

	Note1: Present value of FCF is calculated by dividing the cash flows with WACC
	Note2: WACC is only the cost of capital(Kc) and hence it is taken to calculate present value of FCFF.

Total Present value of cashflows is $6489.08

Answer 2