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See details below: The company is AAPL or Apple
1. Using the facilities of ValuePro (http://www.valuepro.net) for the company that you have selected to study conduct a discounted cash flow valuation.
2. The analysis should explain each variable used in the analysis, why you accepted the given input, or how and why you changed a variable.
3. The analysis should also examine the relevant cash flows, compare the final valuation to the stock’s current price and explain any differences. (Note: Remember to adjust the equity risk premium to between 5% and 6%; also, adjust the growth rate to an appropriate long-term growth rate.)
Table 1
Assumptions for ValuePro.net Valuation
Company Name – Apple (AAPL)
|
|
ValuePro.netAssumptions |
Your Assumptions |
Explain the Reasoning for Your Assumptions
|
|
Excess Return Period (Years) (10 years is appropriate) |
10 |
|
|
|
Revenues ($ mil) (From Income Statement) |
169104 |
|
|
|
Growth Rate (%) (Estimated Annual Growth Rate in Earnings in Future) |
14.5 |
|
|
|
Net Operating Profit Margin (%) (EBIT from Income Statement) |
35.63 |
|
|
|
Tax Rate (%) (From Income Statement: Taxes / Earnings Before Taxes) |
25.16 |
|
|
|
Stock Price ($) (Current Price per Share) |
109.9 |
|
|
|
Shares of Stock Outstanding (mil.) (Be careful with decimal) |
940.1 |
|
|
|
10 Yr. Treasury Bond Yield (%) |
5
|
|
|
|
Bond Spread to Treasury (%) (1.5 is appropriate) |
1.5 |
|
|
|
Preferred Stock Yield (%) |
7.5 |
|
|
|
Depreciation Rate (%) (Percentage of Revenue; Calculate) |
2.09
|
|
|
|
Investment Rate (%) (Percentage of Revenue for Capital Expenditures – Calculate) |
5.3
|
|
|
|
Working Capital (%) (Percentage of Revenue – WC is Current Assets; Calculate) |
-6.04
|
|
|
|
Short Term Assets ($ mil.) (Current Assets from Balance Sheet) |
63337 |
|
|
|
Short-Term Liabilities ($ mil.) (Current Liabilities from Balance Sheet) |
39913
|
|
|
|
Equity Risk Premium % (Should be between 5% and 6%)
|
3 |
|
|
|
Company Beta for Stock (Number) (Look up Beta)
|
1.05
|
|
|
|
Value (Book) of Debt Outstanding ($ mil.) (L-T + S-T Debt from Balance Sheet)
|
0 |
|
|
|
Value Preferred Stock Outstanding ($ mil) |
0 |
|
|
|
Company WACC (%) (Look up or Calculate) |
8.15
|
|
|
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