1 / 22

Chapter 8 Valuation Exhibits October 22, 2000

Chapter 8 Valuation Exhibits October 22, 2000.  2000 The Marketspace Center, Monitor Group DO NOT REPRODUCE DO NOT DISTRIBUTE WITHOUT PERMISSION. Return on New Investment (ROIC). Continuing Value. 35%. 40%. 45%. 8%. $55,933. $58,038. $59,674. NOPLAT. $84,474. 9%. $80,934.

adler
Download Presentation

Chapter 8 Valuation Exhibits October 22, 2000

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Chapter 8 ValuationExhibitsOctober 22, 2000

  2. 2000 The Marketspace Center, Monitor Group DO NOT REPRODUCE DO NOT DISTRIBUTE WITHOUT PERMISSION

  3. Return on New Investment (ROIC) Continuing Value 35% 40% 45% 8% $55,933 $58,038 $59,674 NOPLAT $84,474 9% $80,934 $87,228 Growth 10% $155,025 $162,820 $168,883 Exhibit 8-6: Continuing Value Is Eighty Five Percent of Aol’s Value and Is Highly Sensitive to Assumptions of Long-term Growth and ROIC WACC = 11% in the long run 15

  4. 2000 The Marketspace Center, Monitor Group DO NOT REPRODUCE DO NOT DISTRIBUTE WITHOUT PERMISSION

  5. Exhibit 8-10: Monte Carlo Simulation of the Probability Distribution of Present Values Probability -15,400 -13,300 -11,200 -9,100 -7,000 -4,900 -2,800 -700 1,400 3,500 5,600 7,700 9,800 11,900 $ BN

  6. Exhibit 8-13: Cash Flows and Probabilities for the First Two Years of the Project • D • D • 0.529 • 144 • B • B • 0.727 • 120 • E • E • A • A • 0.396 • 1 • 100 • 100 • C • C • 0.272 • 83.3 • F • F • 0.074 • 69.4 • 0 • 0 • 1 • 1 • 2 • 2 • Free Cash Flows Tree • Objective Probability Tree

  7. Exhibit 8-14: Free Cash Flows Tree and NPV for the Case Without Additional Test • D • B • 120 • E • A • 100 • C • 83.3 • F • 631.63 • 100 • E(FCF) • 110 • 722 • PV • 400 • Inv. • 322 • NPV • 0 • 1 • 2 • 3 • 4

  8. Exhibit 8-15: Objective Probabilities for the Case With Additional Test • 0.264 • 50% • D • 0.529 • 0.529 • 50% • 0.264 • B • 0.727 • 0 .198 • 50% • E • A • 0.396 • 0.396 • 1 • 50% • 0 .198 • C • 0.272 • 0.037 • 50% • F • 0.074 • 0.074 • 50% • 0.037 • p=1 • p=1 • p=1 • p=1 • p=1 • 0 • 1 • 2 • 3 • 4

  9. Exhibit 8-16: Free Cash Flows Tree for the Case With Additional Test • Optimal Execution in year 4: the company decides whether to invest the $700 or cut off the project depending on the year 4 free cash flow • 50% • D • 0 • 144-120 = 24 • 50% • B • 120 • 50% • E • A • 0 • 100-120 =-20 • 100 • 50% • C • 83.3 • 50% • F • 0 • 69.4-120 =-50.6 • 50% • 0 • 1.02 • 100 • E(FCF) • 749.2 • 110 • 712.55 • PV • 400.00 • Inv. • 312.55 • NPV • 0 • 1 • 2 • 3 • 4

  10. Exhibit 8-17: ROA Free Cash Flow Tree • D • Go straight to market • Straight to market • B • 120 • Conduct test market • E • A • 100 • Go straight to market • C • 83.3 • F • Perform the market test • 0 • 1 • 2 • 3 • 4

  11. Exhibit 8-18: Present Value Tree for the Case Without Additional Test • D • 884.0 • B • 803.7 • A • 722.0 • 683.7 • E • 622.0 • C • 400.0 • 365.0 • 281.7 • F • 69.4 • 0 • 1 • 2 • 3 • 4

  12. Exhibit 8-19: ROA Value of the Project With Flexibility • D • 884.0 • 803.75 • A • 728.84 • 683.75 • B • E • Replicating Portfolio for Node C • At Node E: m400+B (1+rf) = 400 • At Node F: m69.4 + B (1+rf) = 133.2 • m = .807 B = -73.57 • Value of replicating portfolio = mV + B • = .807 (440) - 73.57 • = 300.9 • 628.84 • 400.0 • 384.20 • C • 300.9 • F • 103.24 • PV 728.84 • Investment -400.00 • ROA 328.84 • 0 • 1 • 2 • 3 • 4

  13. Exhibit 8-21: The Rise in Schwab’s Market to Sales Ratio

More Related