FCFF Valuation model Damodaran

8/16/2019 FCFF Valuation model Damodaran

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Before you start

What the model doe

Inputs

Options

Other worksheets

Output


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FCFF VALUATION MODELThe spreadsheet has circular reasoning. This is not a problem. Go into calculation options (in excel) and check

the iteration box.

This model is designed to value firms with operating income that is either positive or can be normalized to be

positive. It allows for up to 15 years of high growth, and can be used either as a 2-stage or a 3-stage model.

The inputs are in the following pages:

financial statements, and review and change the inputs for the valuation.

3. If you have R&D or operating leases, you will need to input the required numbers in those worksheets.

Important: Be consistent about the units you use. If you use millions, use millions for all of your inputs.

The spreadsheet can be used to value a company, with fixed inputs for a high growth phase and different inputs

for a stable growth phase (2-stage model) or it can be adjusted to allow for a transition phase (3-stage model).

To switch from one to the other, enter yes in the master input page to the question of whether you want the

inputs adjusted during the second half of the high growth phase.

You can even make it a stable growth model, by setting the length of the high growth period to zero.

There are two other worksheets that you might find useful at the end of this spreadsheet

1. Bottom-up beta estimator: will estimate your levered beta, given an unlevered beta (which you will have to

input.

2. Industry averages: Here, you can look up industry averages for variables such as beta, return on capital,

reinvestment rates and working capital.

The output is contained in the valuation model worksheet.

1. The bulk of the inputs are in the master inputs page. Here, you can input the numbers from the current

2. If you want to normalized operating income, use the earnings normalizer worksheet.


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An apology: I apologize for the number of inputs that are required on this sheet. Many of th

If you have negative operating income, you will either have to normalize it to make it posit

Master Input SheetDo you want to capitalize R&D expenses? No

Do you want to convert operating leases to debt? No

Do you want to normalize operating income? No

InputsFrom Current Financials

Current EBIT = $1,337.93 ! If negative, go

Current Interest Expense = $255.26

Current Capital Spending $603.39

Current Depreciation & Amort'n = $356.20

Effective tax rate (for use on operating income) 31.65%

Marginal tax rate (for use on cost of debt) 34.00% Previous year-en

Current Revenues = $7,010.31 $6,345.70

Current Non-cash Working Capital = $483.70

Chg. Working Capital = ($62.00) revious year-endBook Value of Debt = $2,609.00 $2,207.20

Book Value of Equity = $915.40 $1,306.10

Cash & Marketable Securities = $960.20 $1,286.90

Value of Non-operating Assets = $609.80 $566.60

Minority interests $17.70 $0.00

Market Data for your firm

Is your stock currently traded? Yes

If yes, enter the following:

Current Stock Price = $38.34Number of shares outstanding = 441.71

Market Value of Debt = $2,609.00

If no, enter the followingWould you like to use the book value debt ratio? No

If no, enter the debt ratio to use in valuation 35%

General Market Data

Long Term Riskfree rate= 11.28%

Risk premium for equity = 7.85% You can use the

Ratings

Do you want to estimate the firm's synthetic rating = Yes ! If yes, use the r

If yes, choose the type of firm 2

If not, what is the current rating of the firm? BBB

Enter the cost of debt associated with the rating = 5.75%

Options

Do you have equity options (management options, warrants) outstanding? No

If yes, enter the number of options 51.00

Average strike price $40.35

Average maturity 8.3

Standard Deviation in stock price 25%

Do you want to use the stock price to value the option or your estimated value Current Price


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Valuation Inputs

High Growth Period The questions below, especially th

Length of high growth period = 10

Beta to use for high growth period for your firm= 1.14 You can use the

Do you want to keep the debt ratio computed from your inputs? Yes

If yes, the debt ratio that will be used to compute the cost of capital is 13.35%

If no, enter the debt ratio that you would like to use in the high growth period 7.00%

Do you want to keep the existing ratio of working capital to revenue? Yes

If yes, the working capital as a percent of revenues will be 6.90%

If no, enter the ratio of working capital to revenues to use in analysis 12%

Do you want to compute your growth rate from fundamentals? Yes

If no, enter the expected growth rate in operating income for high growth perio 15%

If yes, the inputs to the fundamental growth calculation (based upon your inputs) are

Return on Capital = 53.20%

Reinvestment Rate = 32.05%

Do you want to change these inputs? No

Return on Capital = 33.00%

Reinvestment Rate = 32.05%

Do you want me to gradually adjust your high growth inputs in the second hal Yes

Stable Growth Period

Growth rate during stable growth period = 10.00%

Beta to use in stable growth period = 1.00

Risk premium for equity in stable growth period = 7.50%

Debt Ratio to use in stable growth period = 30.00%

Pre-tax cost of debt in stable growth period = 9.00%

Tax Rate to use in stable growth period = 34.00%

To compute the reinvestment rate in stable growth, you have two options

Do you want to compute reinvestment needs in stable growth based on fundam Yes

If yes, enter the return on capital that the firm will have in stable growth 25.00%

If no, enter capital expenditure as % of depreciation in stable growth 120% (in percent)


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e inputs are required only if you choose the appropriate option, though.

ive, or use the highgrowth.ls spreadsheet.

If yes, please input your numbers into R&D converter worksheet

If yes, please input your numbers into operating lease worksheet

If yes, please input your numbers into Earnings Normalizer worksheet

ack and choose to normalize earnings.

ost of capital spreadsheet to compute this number

ting estimator worksheet that is attached


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yes or no ones, can be confusing. Please read the comments on the input cells.

ost of capital spreadsheet to compute this number


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Normalizing EarningsApproach used to normalize earnings = 3

If historical average,

Average Earnings before interest and taxes = 3500

If historical average ROC,Historical average pre-tax return on capital = 22%

If sector margin

Pre-tax Operating Margin for Sector = 14.72% ! Look at industry average

Normalized Earnings before interest and taxes = $1,031.69

Worksheet for normalization (Last 5 years of data)

-5 -4 -3 -2 -1

Revenues 2032 2376 2779 3155 3248EBIT 186 454 529 448 383

Operating Margi 9.15% 19.11% 19.04% 14.20% 11.79%


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Total

135902000

14.72%


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onver erThis spreadsheet converts R&D expenses from operating to capital expenses. It makes the appropriate adjustments to operating income, net

income, the book value of assets and the book value of equity.

Inputs

Over how many years do you want to amortize R&D expenses 5 ! If in doubt, use the lookup table below

Enter the current year's R&D expense = $1,771.00 The maximum allowed is ten years

Enter R& D expenses for past years: the number of years that you will need to enter will be determined by the amortization period

Do not input numbers in the first column (Year). It will get automatically updated based on the input above.

Year R& D Expenses

-1 1678.00 ! Year -1 is the year prior to the current year

-2 1529.00 ! Year -2 is the two years prior to the current year

-3 1367.00

-4 1267.00

-5 1205.00

0

0

0

0

0

Output

Year R&D Expense Unamortized portion Amortization this year

Current 1771.00 1.00 1771.00

-1 1678.00 0.80 1342.40 $335.60

-2 1529.00 0.60 917.40 $305.80

-3 1367.00 0.40 546.80 $273.40

-4 1267.00 0.20 253.40 $253.40

-5 1205.00 0.00 0.00 $241.00

0 0.00 0.00 0.00 $0.00

0 0.00 0.00 0.00 $0.00

0 0.00 0.00 0.00 $0.00

0 0.00 0.00 0.00 $0.00

0 0.00 0.00 0.00 $0.00

Value of Research Asset = $4,831.00 $1,409.20

Amortization of asset for current year = $1,409.20


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Adjustment to Operating Income = $361.80 ! A positive number indicates an increase in operating income (add to reported EBIT)

!a "#ect of $%& "pensing $123

Look Up Table for Amortization Periods

Industry Name Amortization Period

Advertising 2

Aerospace/Defen 10 Non-technological Service 2 years

Air Transport 10 Retail, Tech Service 3 years

Aluminum 5 Light Manufacturing 5 yearsApparel 3 Heavy Manufacturing 10 years

Auto & Truck 10 Research, with Patenting 10 years

Auto Parts (OE 5 Long Gestation Period 10 years

Auto Parts (Repl 5

Bank 2

Bank (Canadian) 2

Bank (Foreign) 2

Bank (Midwest) 2

Beverage (Alcoh 3

Beverage (Soft D 3

Building Materia 5

Cable TV 10

Canadian Energy 10

Cement & Aggre 10

Chemical (Basic) 10

Chemical (Diver 10

Chemical (Speci 10

Coal/Alternate E 5

Computer & Peri 5

Computer Softw 3

Copper 5

Diversified Co. 5

Drug 10

Drugstore 3

Educational Serv 3

Electric Util. (Ce 10

Electric Utility ( 10

Electric Utility ( 10


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ectr ca qu p 10Electronics 5

Entertainment 3

Environmental 5

Financial Servic 2

Food Processing 3

Food Wholesaler 3

Foreign Electron 5

Foreign Telecom 10

Furn./Home Furn 3Gold/Silver Mini 5

Grocery 2

Healthcare Info 3

Home Appliance 5

Homebuilding 5

Hotel/Gaming 3

Household Produ 3

Industrial Servic 3

Insurance (Diver 3

Insurance (Life) 3

Insurance (Prop/ 3

Internet 3Investment Co. ( 3

Investment Co. ( 3

Investment Co. ( 3

Machinery 10Manuf. Housing/ 5

Maritime 10

Medical Services 3

Medical Supplies 5

Metal Fabricatin 10

Metals & Minin 5

Natural Gas (Dis 10Natural Gas (Div 10

Newspaper 3

Office Equip & 5

Oilfield Services 5

Packaging & Co 5

Paper & Forest P 10


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pera ng ease onver erInputs

Operating lease expense in current year = $504.00

Operating Lease Commitments (From footnote to financials)

Year Commitment ! Year 1 is next year, ….1 $ 453.002 $ 371.00

3 $ 265.004 $ 180.00

5 $ 122.006 and beyond $ 259.00

OutputPre-tax Cost of Debt = 12.58% ! If you do not have a cost of debt, use the ratings estimator

From the current financial statements, enter the following

Reported Operating Income (EBIT) = $1,337.93 ! This is the EBIT reported in the current income statementReported Debt = $2,609.00 ! This is the interest-bearing debt reported on the balance sheet

Number of years embedded in yr 6 estimate = 1 ! I use the average lease expense over the first five yearsto estimate the number of years of expenses in yr 6

Converting Operating Leases into debt

Year Commitment Present Value1 $ 453.00 $402.38

2 $ 371.00 $292.72

3 $ 265.00 $185.724 $ 180.00 $112.055 $ 122.00 $67.46

6 and beyond $ 259.00 $127.21 ! Commitment beyond year 6 converted into an annuity for ten years

Debt Value of leases = $ 1,187.55

Restated Financials

Depreciation on Operating Lease Asset = $197.92 ! I use straight line depreciation

Adjustment to Operating Earnings = $306.08 ! Operating lease expense - Depreciation

Adjustment to Total Debt outstanding = $ 1,187.55


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!wo'(tage )*)) &iscount Model

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Input Summary

Normalized EBIT (before adjustments) $1,337.93

Adjusted EBIT = $1,337.93

Adjusted Interest Expense = $255.26

Adjusted Capital Spending $603.39

Adjusted Depreciation & Amort'n = $356.20

Tax Rate on Income = 34.00%

Current Revenues = $7,010.31

Current Non-cash Working Capital = $483.70

Chg. Working Capital = $45.86

Adjusted Book Value of Debt = $2,207.20

Adjusted Book Value of Equity = $1,306.10

Input Diagn

Length of High Growth Period = 10 Forever

Growth Rate = 17.05% 10.00%

Debt Ratio used in Cost of Capital Calcula 13.35% 30.00%

Beta used for stock = 1.14 1.00

Riskfree rate = 11.28% 11.28%

Risk Premium = 7.85% 7.50%

Cost of Debt = 12.58% 9.00% Cost of debt is less than the riskfree rate - Not possible

Effective Tax rate (for cash flow) = 31.65% 34.00%

Marginal tax rate (for cost of debt) = 34.00% 34.00% If this is a US company, this tax rate is below the marginal tax rate. Move towa

Return on Capital = 53.20% 25.00% Your return on capital exceeds your cost of capital by more than 5%. That is un

Reinvestment Rate = 32.05% 40.00% Imputed Return on capital foreve 25.00%


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+age

Output from the program

Cost of Equity = 20.23%

Equity/(Debt+Equity ) = 86.65%

After-tax Cost of debt = 8.30%

Debt/(Debt +Equity) = 13.35%

Cost of Capital = 18.64%

Intermediate Output

Expected Growth Rate 17.05%

Working Capital as percent of revenues = 6.90% (in percent)

The FCFF for the high growth phase are shown below (upto 10 years)

Current 1 2 3 4 5 6

Expected Growth Rate 17.05% 17.05% 17.05% 17.05% 17.05% 15.64% 1

Cumulated Growth 117.05% 137.01% 160.37% 187.71% 219.71% 254.07% 29

Reinvestment Rate 32.05% 32.05% 32.05% 32.05% 32.05% 33.64% 3

EBIT $1,338 $1,566 $1,833 $2,146 $2,511 $2,940 $3,399 $

Tax rate (for cash flow 31.65% 31.89% 32.12% 32.36% 32.59% 32.83% 33.06% 3

EBIT * (1 - tax rate) $914 $1,067 $1,244 $1,451 $1,693 $1,975 $2,275 $

- (CapEx-Depreciatio $247 $259 $302 $352 $410 $478 $599

-Chg. Working Capita $46 $82 $97 $113 $132 $155 $166

Free Cashflow to Firm $621 $725 $845 $986 $1,150 $1,342 $1,510 $

Cost of Capital 18.64% 18.64% 18.64% 18.64% 18.64% 17.90% 1

Cumulated Cost of Capital 1.1864 1.4075 1.6698 1.9810 2.3502 2.7707 3

Present Value $611 $601 $591 $581 $571 $545 $

Growth Rate in Stable Phase = 10.00%

Reinvestment Rate in Stable Phase = 40.00%

FCFF in Stable Phase = $2,338.63

Cost of Equity in Stable Phase = 18.78%

Equity/ (Equity + Debt) = 70.00%


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+age

AT Cost of Debt in Stable Phase = 5.94%

Debt/ (Equity + Debt) = 30.00%

Cost of Capital in Stable Phase = 14.93%

Value at the end of growth phase = $47,455.92

Valuation

Present Value of FCFF in high growth phase = $5,381.33

Present Value of Terminal Value of Firm = $9,447.10

Value of operating assets of the firm = $14,828.43

Value of Cash, Marketable Securities & Non-operating assets = $1,570.00

Value of Firm = $16,398.43

Market Value of outstanding debt = $2,609.00

Minority Interests $17.70

Market Value of Equity = $13,771.73

Value of Equity in Options = $0.00

Value of Equity in Common Stock = $13,771.73Market Value of Equity/share = $31.18


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Revisit input cell

B54

B74

B77

B75

B78

tax rate B79

oes your company have that sustainable a competitive a B82

B81-83


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+age

9 10 Terminal Year

11.41% 10.00%

364.79% 401.27%

38.41% 40.00%

$4,881 $5,369

33.77% 34.00% 34.00%

$3,233 $3,543 $3,897.71

$1,061 $1,241 $1,325.59

$181 $176 $233.50

$1,991 $2,126 $2,338.63

15.67% 14.93%

4.3709 5.0233

$456 $423


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+age


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Valuing Options or WarrantsEnter the current stock price = $38.34

Enter the strike price on the option = $40.35

Enter the expiration of the option = 8.3

Enter the standard deviation in stock prices = 25.00% (volatility)

Enter the annualized dividend yield on stock = 0.00%

Enter the treasury bond rate = 11.28%

Enter the number of warrants (options) outstanding 51.00

Enter the number of shares outstanding = 441.71

Do not input any numbers below this line

VALUING WARRANTS WHEN THERE IS DILUTION

Stock Price= 38.34 # Warrants issued= 50.998

Strike Price= 40.35 # Shares outstanding= 442Adjusted S = 36.6287168684 T.Bond rate= 11.28%

Adjusted K = 40.35 Variance= 0.0625

Expiration (in years) = 8.3 Annualized dividend yield= 0.00%

Div. Adj. interest rate= 11.28%

d1 = 1.5256741541

N (d1) = 0.9364544828

d2 = 0.8054311395

N (d2) = 0.7897145358

Value per option = $21.81

Value of all options outstanding = $1,112.11


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Estimation of Current Cost of Capital

Inputs

Equity

Number of Shares outstanding = 441.71

Current Market Price per share = $38.34

Unlevered beta = 0.97

Riskfree Rate = 11.28%

Equity Risk Premium = 6.44%

Debt

Book Value of Straight Debt = $2,609.00

Interest Expense on Debt = $255.26

Average Maturity = 5

Pre-tax Cost of Debt = 3.65%

Tax Rate = 34%

Book Value of Convertible Debt = 0

Interest Expense on Convertible = 0

Maturity of Convertible Bond = 0

Market Value of Convertible = 0

Debt value of operating leases = $ -

Preferred Stock

Number of Preferred Shares = 0

Current Market Price per Share= 70

Annual Dividend per Share = 5

Output

Estimating Market Value of Straight Debt = $3,328.48

Estimated Value of Straight Debt in Convertible = $0.00

Value of Debt in Operating leases = $0.00

Estimated Value of Equity in Convertible = $0.00

Levered Beta for equity = 1.10

Equity Debt Preferred Stock Capital

Market Value $16,935.00 $3,328.48 $0.00 $ 20,263.48

Weight in Cost of Capital 83.57% 16.43% 0.00% 100.00%

Cost of Component 18.35% 2.41% 7.14% 15.73%


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If you are a multinational company and have a breakdown by

Country Revenues ERP Weight

Brazil 800 7.85% 100.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

0.00% 0.00%

Total 800 100.00%

If you are a multinational company and have a breakdown on

Region Revenues ERP Weight

Africa 0 10.04% 0.00%Asia 0 6.51% 0.00%

Australia & New Zealand 5.00% 0.00%

Caribbean 10 12.65% 10.00%

Central and South America 8.62% 0.00%

Eastern Europe & Russia 7.96% 0.00%

Middle East 30 6.14% 30.00%

North America 35 5.00% 35.00%

Western Europe 15 6.29% 15.00%

Global 10 6.35% 10.00%

Total 100 100.00%

If you are a multi-business company, you can input the following

Business Revenues EV/Sales Estimated Value

Toiletries/Cosmetics $ 100.00 1.7329 $ 173.29

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

0.0000 $ -

*ompany -. $ 173.29


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country, you can use this table (for up to 10 countries)

Weighted ERP

7.85%

0.00%

0.00%

0.00%0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

7.85%

y by region, you can use this table instead

Weighted ERP

0.0000%0.0000%

0.0000%

1.2647%

0.0000%

0.0000%

1.8432%

1.7500%

0.9441%

0.6350%

6.4369%

Unlevered Beta

0.9727

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

./010


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Inputs for synthetic rating estimationEnter the type of firm = 2 (Enter 1 if large manufacturing firm, 2 if smaller or riskier firm, 3 if fi

Enter current Earnings before interest and taxes (EBIT) = $1,337.93 (Add back only l

Enter current interest expenses = $255.26 (Use only long te

Enter current long term government bond rate = 11.28%

OutputInterest coverage ratio = 5.24

Estimated Bond Rating = A3/A-

Estimated Default Spread = 1.30%

Estimated Cost of Debt = 12.58%

For large manufacturing firms For financial service firms

If interest coverage ratio is If long term interest coverage rati

> ≤ to Rating is Spread is greater than ≤ to

-100000 0.199999 &12& 12.00% -100000 0.049999

0.2 0.649999 *12* 10.50% 0.05 0.099999

0.65 0.799999 *a12** 9.50% 0.1 0.199999

0.8 1.249999 *aa2*** 8.75% 0.2 0.299999

1.25 1.499999 3423' 7.25% 0.3 0.399999

1.5 1.749999 3123 6.50% 0.4 0.499999

1.75 1.999999 3-235 5.50% 0.5 0.599999

2 2.2499999 3a1233 4.00% 0.6 0.749999

2.25 2.49999 3a-2335 3.00% 0.75 0.899999

2.5 2.999999 3aa12333 2.00% 0.9 1.199999

3 4.249999 A42A' 1.30% 1.2 1.49999

4.25 5.499999 A12A 1.00% 1.5 1.99999

5.5 6.499999 A-2A5 0.85% 2 2.49999

6.5 8.499999 Aa12AA 0.70% 2.5 2.99999

8.50 100000 Aaa2AAA 0.40% 3 100000

For smaller and riskier firms

If interest coverage ratio is

greater than ≤ to Rating is Spread is

-100000 0.499999 &12& 12.00%

0.5 0.799999 *12* 10.50%

0.8 1.249999 *a12** 9.50%

1.25 1.499999 *aa2*** 8.75%

1.5 1.999999 3423' 7.25%

2 2.499999 3123 6.50%

2.5 2.999999 3-235 5.50%

3 3.499999 3a1233 4.00%

3.5 3.9999999 3a-2335 3.00%

4 4.499999 3aa12333 2.00%

4.5 5.999999 A42A' 1.30%

6 7.499999 A12A 1.00%

7.5 9.499999 A-2A5 0.85%


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9.5 12.499999 Aa12AA 0.70%

12.5 100000 Aaa2AAA 0.40%


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nancial service firm)

ng term interest expense for financial firms)

rm interest expense for financial firms)

is

Rating is Spread is ating Income Decline

&12& 12.00% -50.00%

*12* 10.50% -40.00%

*a12** 9.50% -40.00%

*aa2*** 8.75% -40.00%

3423' 7.25% -25.00%

3123 6.50% -20.00%

3-235 5.50% -20.00%

3a1233 4.00% -20.00%

3a-2335 3.00% -20.00%

3aa12333 2.00% -20.00%

A42A' 1.30% -17.50%

A12A 1.00% -15.00%

A-2A5 0.85% -10.00%

Aa12AA 0.70% -5.00%

Aaa2AAA 0.40% 0.00%


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Industry Name Number of rms Revenue growtax Operatng !a After-tax RO" e e#e$tve ta

Advertising 4- 6.78 --.668 --.9/8 -7.-8

Aerospace2&efense 77 -1.448 /.//8 -.8 14.48

Air !ransport 49 7.9-8 .68 -7.8 17.48

Apparel 67 0.68 -.08 -6.718 -.98

Auto +arts 96 ./8 7.8 -6.78 -0.8

Automotive -- /.778 7.998 7.-8 -0.0/83ank 409 .8 ;A ;A -0./-8

3ank


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Machinery 1 4.608 -1.9-8 --.078 16.608

Maritime 9- '0.68 -.68 4.448 9.//8

Med (upp Invasive 06 -.-68 14.48 -7.18 -9.18

Med (upp ;on'Invasive -10 --.198 0.008 -/.198 --.-68

Medical (ervices -7 .498 -.978 -4.048 -.078

Metal )abricating 19 .068 -4.7/8 -4.018 -7.798

Metals % Mining


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%nlevered &eta y )Levered* ost of e(utdevaton n sto$, pr Pre-tax $ost of debt

-.-4 -.4 /.968 4.18 9.968

.0 ./1 0.718 66.098 6.68

./1 -.0 .408 74./78 6.968

-.-0 -.1 /.78 70.8 9.68

-.9 -.77 --.498 9-.98 6.968

-.-6 -.0 --.918 6/.9-8 6.68.71 . 0.698 64.-8 6.68

.7 ./9 0.8 41.-18 6.68

.0- .- 0.8 60./8 6.68

-.10 -.16 /.118 4.708 9.968

-.1 -.7/ --.98 07.008 9.68

.0- ./7 0.48 40.418 6.68

-.1 -.41 /.748 4.-78 6.68

-.16 -.41 /.718 66.018 6.68

-.4 -.-4 .0-8 7.78 6.968

./ -.66 -.178 67.08 6.68

./ .9 0.18 70.-68 9.68

-.1/ -.1 /.698 00.178 9.68

. -.-9 .0/8 90.1-8 6.968

.// -.6 .198 6.08 9.968

.1 .1 0.-48 01.698 9.68

.9 .0 7./48 -.68 9.968

.49 .99 9.008 -6.8 4.968

.17 .4/ 6.//8 -4.8 4.968

.40 .96 9.078 -6.--8 4.968

-.46 -.49 /.008 70.-98 9.68

-.- -.-6 .068 09.468 9.68

-.-9 -.- .978 97.--8 6.968

-.- -.44 /.0-8 7-.-8 6.968

-.44 -.7 .498 6/.608 6.68

.46 .69 9.4-8 00./8 9.68

./9 -.-/ ./8 96.718 6.968

.07 .9 0.1/8 9-.48 6.968

-.-9 -.-- .908 1/.48 6.68

.- -.- .--8 19./-8 6.68

-.44 -.4/ -.-8 69.7-8 6.68

-. -.0 .408 96.4-8 6.968

-.67 -.0/ -1.-8 4/.-78 6.68

-.6 -.0/ --./8 6-.608 6.68

-.-6 -.6/ -.608 9.678 6.968

.7 ./6 0.098 6.408 6.68-.9 -.60 -.68 9.668 6.968

.7 ./4 0.78 9.148 6.968

-.1 -.-6 .048 99./18 6.968

-.77 -.71 --.-68 1/.48 6.68

.- .- 0./8 10.48 6.68

-.1 ./9 0.008 /.8 7.68

-.60 -.-/ /.-8 77.8 9.68

./6 ./ 0.978 9-.18 6.968


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-./ -.-/ .//8 60./8 6.68

.0- -.6 -.678 09.7-8 9.68

./1 ./0 0.08 99.-78 6.968

.0 . 0.698 71.-68 6.968

.04 ./- 0.78 01.0/8 9.68

-.4- -.6- -.08 90.918 6.968

-.11 -.4/ /./8 1.08 9.968-.6 -.1/ /.9-8 64.--8 6.68

.6 .97 9.48 1/.1/8 6.68

-./ 1.- -4.8 61.748 6.68

./6 -.-6 .018 97.978 6.968

.70 -.- .--8 40.48 6.68

-.1/ -.60 -.408 94.608 6.968

.0 -./ .68 66.7/8 6.68

./4 -.-0 ./-8 64.918 6.68

-.- -.0 .48 60./8 6.68

-.14 -.6 -.618 01./-8 9.68

./ -. .98 99./-8 6.968

.6- .97 9.98 11.448 4.968

.04 -.9 -.948 .-08 9.968

.04 .4 0.-/8 77.168 9.68

-. -.-1 .798 90.9-8 6.968

-.9 -.70 --.68 44.778 6.68

./1 -.-4 .08 96.1-8 6.968

./ -.49 /.008 1/.008 6.68

-.16 -.6 -.48 41.1-8 6.68

-.-9 -.40 /.08 67.-8 6.68

./ .- 0.8 1.78 4.968

./6 -. .68 94.98 6.968

-.7 -.7 --.668 91.668 6.968

-.44 -.10 /.6-8 97.68 6.968

-.6 -.10 /.68 47.668 6.68

-.- -.-0 ./8 1.9/8 6.68

-.9 -.- ./98 6./8 6.68

.7 .0 7./98 4.-68 6.68

. -.- ./98 64./18 6.68

-.66 -.4 /./48 6/.918 6.68

-. -.04 --.0-8 47.48 6.68

-.4/ -.41 /.718 6/./8 6.68

-.11 -.77 --.478 4/.798 6.68

-.10 -.9 .108 7-.-8 6.968

./ -.9 .48 71.6/8 6.968.60 .00 7.08 6-./08 6.68

.0/ .7/ 7.9-8 46.68 6.68

.- . 0.698 4.-18 6.68

./0 -.4 .-8 4.68 6.68

-.-/ -.6 -.98 61.708 6.68

.4- .69 9.108 -6.098 4.968

./4 -.- ./78 71.-68 6.968


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!ar,et ebt."aptal ost of $apta +ales."aptal '/.+ales '/.'&I0A

17.498 0./8 -.4/ -.70 -./-

-7.678 7.008 1.70 -.4- -.96

4.4-8 7.778 1.01 -.- 0./

.908 .968 -./1 1. -9.0

-.--8 /.08 1.94 ./4 /.97

67.718 0.18 -.41 ./ .0769.068 9.-98 ;A ;A 9.6

16.4/8 7.6/8 ;A ;A 9.64

-.-18 7.168 .7 4.9/ -6.47

--.-78 .978 ./4 .-0 1.40

4.198 ./68 -.0 -.76 17./

49.198 9./18 .7 1.71 .4

-./8 .108 -.61 -.9/ .40

-6.68 .978 -.4 1.0 -.--

-7.478 0.048 -.0 -.0- -./1

64.708 7.68 .0 -.6 7./0

0.98 7./8 -.17 6./ -1./

0./8 ./98 1.69 -.70 .7/

40.0/8 7.98 .7 1.- -1.7

--.718 0.708 .1 6.7 --.6

0.48 7.48 -. 7.- 4./0

-1.948 7.608 4.4 -.1 9./9

66.668 6.-98 .6/ 1.7- .9-

66.-08 4.048 .6 4./ /.97

6-.168 6.178 .9- 1.67 .41

-.6/8 /.78 -.67 -./- -.6

-9.98 0.98 1.7 .4 /.7-

-.9/8 0./98 4.07 .7- /.-0

-7./98 .918 .0/ 4.4- -1.

7.-8 .8 -.10 -./7 -.-

1.618 6.778 .07 1.47 -.49

49./8 7.0/8 .41 9.6 -.9

-0.48 7.918 -.0 -.6 -1.6

16.078 0.98 1.14 .96 9.4/

1./8 7.9-8 .9 1.16 --.7/

-1.68 /.-8 -./6 -.46 -6.0

0.0-8 0./48 -.-- 6.06 1-.--

1/.6/8 /.-8 -./9 -.-6 .14

49.118 .7-8 ./6 -.6 ;A

4.798 .-8 .- 4.- -4.-

-4.08 0.18 -.-/ 1.79 -4.-4.448 /.078 7./ .91 -4.-6

40./-8 9.8 -.6 -.97 --.16

-7.78 0.078 .4 6.9 -6.6

17./8 .0/8 ;A ;A -.9-

-0./-8 7.198 ;A ;A 1//.

1.468 0.708 1.1/ 9.90 10.00

9.498 .7/8 4.9/ 4.9 .-0

9.1/8 0.4-8 1.0/ 1.-4 -1.71


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'/.'&I0 Pr$e.&oo, 0ralng P'

-6.76 4.16 6/.40

-4. 6.9 16.41

-1.97 9. -7.-7

-/.61 6.7 1-./0

-4.6 1./ 14.17

-9.1 -.9/ -1.799.6 -.1- -.-6

9.64 -.9/ -.90

-0.97 6.0/ 1./7

47.0 7.67 74.0-

1/.94 1.61 099.9

-4.7 9.16 19./9

--.19 1.07 -6.99

-4.-7 4.60 11.-7

-6.7 4./- 4.-

-4.04 -.64 47.47

-9.1 6.1 79.4

-.94 6.7 9-.91

-7.99 1./- 1.7

-9.1 4.9 6/.--

6/.44 7.44 -9.-0

.1 1./4 16.-

-6.6 -.71 -7.7/

-9.67 -.96 -7.70

-6.7 -.96 -7.9

1.1/ 1./ 14.47

-4./9 1.6- 19.17

--.- 1.17 11.6-

-9.10 4.9 19.47

-4.- -./1 1.-

-7.99 1.97 1.7

--.16 1.47 17.7/

-9.-9 4.10 4-.49

--.06 -.1- 46.11

-9.19 1.0 11.6

-/.76 1./9 11.49

46.71 9.40 -9.16

-.9- 4.9 -/.

;A 1.19 19.97

1.40 9.69 40.//

-9.74 6.4 1-.1-7.90 4.1 17.40

-9.19 1.49 40.74

1.71 9.- 1-6.49

-.9- -.4 -6.01

4-.61 -.47 -0.7-

4/./ 7.4 -6/.09

/.4- 4./1 11.66

-9.7 9.1 47.6


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-9.4- 4.16 10.6-

10.7- -.1 44.9

-4.7- 4.41 4-.61

-6.1 4./1 61.9

.01 1.99 1.-

-1.6/ 1. -/.94

./7 -./4 /6.1711. 1. 9-.14

-0.09 1.4 -0./9

-9./ 4.6 17.40

/.64 -.70 1.1-

-/.4 1.0- 17.9

-4.9 -.// 4-.7

-4.64 4.49 1-./

-9.- 1.67 11.6

7.46 -.66 -0.90

. -.71 9-.41

-9. 1.6 -9.-6

16.69 4.- 6./

11.14 -.-- 17.9

7.46 .00 -.4

-7.71 1./7 41.-9

/.0 -.71 14.44

-0. 4.91 -.0

./ -.17 -/.4

-4.6 4.7 1-.09

-7.9 1.94 17.94

40.- ./1 -.9-

-7.7- 0.1/ 49.1

1-.9 7. 16.11

--.7/ 9.01 14.1

-9.4 6.60 1.1

-7.-/ 9.76 4-.1/

--.4 4.16 14./9

-6.4- 4.0 1/.0

-4.9 -.49 1.-1

-9.-/ 4.-1 6-.-

-/./0 1.1 6-.07

-.6 9.-- 1-.7

10./1 ./6 16.40

;A 1.6 44.66

-.9 1.19 -.9--.7 1.4 1.0

9.91 -.41 99.99

-.6 -6.69 -7./9

-7.6 0.-4 1/.1

-4.60 6.1 1-.11

-9.7/ -./0 1-.91

64.6- 4./9 06.04


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Country ong-Term RatingAdj. Default Spread

Abu Dhabi Aa2 0.50%Albania B1 4.50%Andorra A3 1.20%Angola Ba3 3.60%Argentina B3 6.50%Armenia Ba2 3.00%Aruba Baa1 1.60%Australia Aaa 0.00%Austria Aaa 0.00%Azerbaijan Baa3 2.20%Bahamas Baa1 1.60%Bahrain Baa2 1.90%Bangladesh Ba3 3.60%Barbados Ba1 2.50%Belarus B3 6.50%Belgium Aa3 0.60%Belize Caa2 9.00%Benin B2 5.50%Bermuda Aa3 0.60%Bolivia Ba3 3.60%Bosnia and Herzegovina B3 6.50%Botswana A2 0.85%Brazil Baa2 1.90%Bulgaria Baa2 1.90%Burkina Faso B2 5.50%Cambodia B2 5.50%

Cameroon B2 5.50%Canada Aaa 0.00%Cape Verde B2 5.50%Cayman Islands Aa3 0.60%Chile Aa3 0.60%China Aa3 0.60%Colombia Baa3 2.20%Cook Islands B1 4.50%Costa Rica Baa3 2.20%Croatia Ba1 2.50%Cuba Caa1 7.50%

Curacao B1 4.50%Cyprus Caa3 10.00%Czech Republic A1 0.70%Democratic Republic of Co B3 6.50%Denmark Aaa 0.00%Dominican Republic B1 4.50%Ecuador Caa1 7.50%Egypt Caa1 7.50%


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El Salvador Ba3 3.60%Estonia A1 0.70%Fiji B1 4.50%Finland Aaa 0.00%France Aa1 0.40%Gabon Ba3 3.60%Georgia Ba3 3.60%Germany Aaa 0.00%Ghana B1 4.50%Greece Caa3 10.00%Guatemala Ba1 2.50%Honduras B2 5.50%Hong Kong Aa1 0.40%Hungary Ba1 2.50%Iceland Baa3 2.20%India Baa3 2.20%Indonesia Baa3 2.20%Ireland Ba1 2.50%Isle of Man Aa1 0.40%Israel A1 0.70%Italy Baa2 1.90%Jamaica Caa3 10.00%Japan Aa3 0.60%Jordan B1 4.50%Kazakhstan Baa2 1.90%Kenya B1 4.50%Korea Aa3 0.60%

Kuwait Aa2 0.50%Latvia Baa2 1.90%Lebanon B1 4.50%Liechtenstein Aaa 0.00%Lithuania Baa1 1.60%Luxembourg Aaa 0.00%Macao Aa3 0.60%Macedonia Ba3 3.60%Malaysia A3 1.20%Malta A3 1.20%Mauritius Baa1 1.60%

Mexico Baa1 1.60%Moldova B3 6.50%Mongolia B1 4.50%Montenegro Ba3 3.60%Montserrat Baa3 2.20%Morocco Ba1 2.50%Mozambique B1 4.50%Namibia Baa3 2.20%


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Vietnam B2 5.50%Zambia B1 4.50%Regon 1eghted Averag 1eghted Average2 0RP

Africa 4.478 -.68

Asia -.8 7.9-8

Australia % ;ew Gealand .8 9.8

*aribbean 9.-8 -1.798*entral and (outh Americ 1.618 .718

"astern "urope % $ussia -./8 0./78

Middle "ast .078 7.-68

;orth America .8 9.8

estern "urope .78 7.1/8

Clobal ./8 7.498


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Total Risk Premium ountry Risk Premiu Region

5.75% 0.75% Middle "ast11.75% 6.75% "astern "urope % $ussia6.80% 1.80% estern "urope

10.40% 5.40% Africa14.75% 9.75% *entral and (outh America9.50% 4.50% "astern "urope % $ussia7.40% 2.40% *aribbean5.00% 0.00% Australia % ;ew Gealand5.00% 0.00% estern "urope8.30% 3.30% "astern "urope % $ussia7.40% 2.40% *aribbean7.85% 2.85% Middle "ast

10.40% 5.40% Asia8.75% 3.75% *aribbean

14.75% 9.75% "astern "urope % $ussia5.90% 0.90%

estern "urope18.50% 13.50% *entral and (outh America13.25% 8.25% Africa5.90% 0.90% *aribbean

10.40% 5.40% *entral and (outh America14.75% 9.75% "astern "urope % $ussia6.28% 1.28% Africa7.85% 2.85% *entral and (outh America7.85% 2.85% "astern "urope % $ussia

13.25% 8.25% Africa13.25% 8.25% Asia

13.25% 8.25% Africa5.00% 0.00% ;orth America13.25% 8.25% Africa5.90% 0.90% *aribbean5.90% 0.90% *entral and (outh America5.90% 0.90% Asia8.30% 3.30% *entral and (outh America

11.75% 6.75% Australia % ;ew Gealand8.30% 3.30% *entral and (outh America8.75% 3.75% "astern "urope % $ussia

16.25% 11.25% *aribbean

11.75% 6.75% *aribbean20.00% 15.00% estern "urope6.05% 1.05% "astern "urope % $ussia

14.75% 9.75% Africa5.00% 0.00% estern "urope

11.75% 6.75% *aribbean16.25% 11.25% *entral and (outh America16.25% 11.25% Africa


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10.40% 5.40% *entral and (outh America6.05% 1.05% "astern "urope % $ussia

11.75% 6.75% Asia5.00% 0.00% estern "urope5.60% 0.60% estern "urope

10.40% 5.40% Africa10.40% 5.40% "astern "urope % $ussia5.00% 0.00% estern "urope

11.75% 6.75% Africa20.00% 15.00% estern "urope8.75% 3.75% *entral and (outh America

13.25% 8.25% *entral and (outh America5.60% 0.60% Asia8.75% 3.75% "astern "urope % $ussia8.30% 3.30% estern "urope8.30% 3.30% Asia8.30% 3.30%

Asia8.75% 3.75% estern "urope5.60% 0.60% estern "urope6.05% 1.05% Middle "ast7.85% 2.85% estern "urope

20.00% 15.00% *aribbean5.90% 0.90% Asia

11.75% 6.75% Middle "ast7.85% 2.85% "astern "urope % $ussia

11.75% 6.75% Africa5.90% 0.90% Asia

5.75% 0.75% Middle "ast7.85% 2.85% "astern "urope % $ussia11.75% 6.75% Middle "ast5.00% 0.00% estern "urope7.40% 2.40% "astern "urope % $ussia5.00% 0.00% estern "urope5.90% 0.90% Asia

10.40% 5.40% "astern "urope % $ussia6.80% 1.80% Asia6.80% 1.80% estern "urope7.40% 2.40% Asia

7.40% 2.40% *entral and (outh America14.75% 9.75% "astern "urope % $ussia11.75% 6.75% Asia10.40% 5.40% "astern "urope % $ussia8.30% 3.30% *aribbean8.75% 3.75% Africa

11.75% 6.75% Africa8.30% 3.30% Africa


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5.00% 0.00% estern "urope5.00% 0.00% Australia % ;ew Gealand

14.75% 9.75% *entral and (outh America10.40% 5.40% Africa5.00% 0.00% estern "urope6.05% 1.05% Middle "ast

16.25% 11.25% Asia7.85% 2.85% *entral and (outh America

11.75% 6.75% Asia10.40% 5.40% *entral and (outh America7.85% 2.85% *entral and (outh America8.30% 3.30% Asia6.28% 1.28% "astern "urope % $ussia

10.40% 5.40% estern "urope5.75% 0.75% Middle "ast6.28% 1.28% Middle "ast

10.40% 5.40% Africa8.30% 3.30% "astern "urope % $ussia

7.40% 2.40% "astern "urope % $ussia13.25% 8.25% Africa5.90% 0.90% Middle "ast

11.75% 6.75% Africa11.75% 6.75% "astern "urope % $ussia5.00% 0.00% Asia6.28% 1.28% "astern "urope % $ussia8.75% 3.75% "astern "urope % $ussia7.40% 2.40% Africa

8.30% 3.30% estern "urope11.75% 6.75% Asia7.40% 2.40% *aribbean

13.25% 8.25% *aribbean10.40% 5.40% *entral and (outh America5.00% 0.00% estern "urope5.00% 0.00% estern "urope5.90% 0.90% Asia7.40% 2.40% Asia7.40% 2.40% *aribbean

10.40% 5.40% Africa

8.30% 3.30% estern "urope11.75% 6.75% Africa16.25% 11.25% "astern "urope % $ussia5.75% 0.75% Middle "ast5.60% 0.60% estern "urope5.00% 0.00% ;orth America8.30% 3.30% *entral and (outh America

16.25% 11.25% *entral and (outh America


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13.25% 8.25% Asia11.75% 6.75% Africa

1eghted Average2 "RP

9.68

-.9-8

.8

0.7984.718

1./78

-.-68

.8

-.1/8

-.498


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Hes2;o

Hes *urrent +rice

;o "stimated >alue

FCFF Valuation model Damodaran

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Transcript of FCFF Valuation model Damodaran