Question

Equity/share at perpetual growth rate sensitivities Long term growth rate 2.5% 2.8% 3.0% 3.3% 3.5% WACC 8.0% 7.5% 7.0% 6.5% 6

How do I do a sensitivity analysis of this graph?

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Answer #1

Under What IF Analysis tab, select Data table

A B C E G H 2014 2015 2016 Long Term Growth rate 2.80% 2.50% 3% 3.30% 3.50% 8% 7.50% 7% 6.50% 6% 2017 2018 2019 2020 2021 202

First select the table area.

In Cell C2016, reference the cell to which the value of equity per share is derived.

For Row input cell, reference the cell where the long term growth rate is entered

For Column input , reference the cell where the WACC is entered.

Click OK

You will have the sensitivity/scenario values of Equity value / share  for different values of WACC and Growth rate.

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