Chiara Company’s management has made the projections shown in Table 19.5. Use this Excel spreadsheet as a starting point to value the company as a whole. The WACC for
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| Historical |
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| Forecast |
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| Year: | -2 | -1 | 0 | 1 | 2 | 3 | 4 | 5 |
1. Sales |
| 35,348 | 39,357 | 40,123 | 36,351 | 30,155 | 28,345 | 29,982 | 30,450 |
2. Cost of goods sold |
| 17,834 | 18,564 | 22,879 | 21,678 | 17,560 | 16,459 | 15,631 | 14,987 |
3. Other costs |
| 6,968 | 7,645 | 8,025 | 6,797 | 5,078 | 4,678 | 4,987 | 5,134 |
4. EBITDA (1-2-3) |
| 10,546 | 13,148 | 9,219 | 7,876 | 7,517 | 7,208 | 9,364 | 10,329 |
5. Depreciation |
| 5,671 | 5,745 | 5,678 | 5,890 | 5,670 | 5,908 | 6,107 | 5,908 |
6. EBIT (Pretax profit) (4-5) |
| 4,875 | 7,403 | 3,541 | 1,986 | 1,847 | 1,300 | 3,257 | 4,421 |
7. Tax at 35% |
| 1,706 | 2,591 | 1,239 | 695 | 646 | 455 | 1,140 | 1,547 |
8. Profit after tax (6-7) |
| 3,169 | 4,812 | 2,302 | 1,291 | 1,201 | 845 | 2,117 | 2,874 |
9. Change in working capital |
| 325 | 566 | 784 | -54 | -342 | -245 | 127 | 235 |
10. Investment (change in gross fixed assets) |
| 5,235 | 6,467 | 6,547 | 7,345 | 5,398 | 5,470 | 6,420 | 6,598 |
TABLE 19.5 Cash flow projections for Chiara Corp. ($ thousands).
Chiara is 12% and the long-run growth rate after year 5 is 4%. The company has $5 million debt and 865,000 shares outstanding. What is the value per share?
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