Accounting Question
Module 7: Assignment — DCF Valuation
- Due Sunday by 11:59pm
- Points 100
- Submitting a file upload
- File Types xls, xlsx, doc, docx, and pdf
Assignment – Module 7: Assignment — DCF Valuation
Introduction:
Objective:
Analyze the given financial statements and use the Discounted Cash Flow (DCF) method to estimate the intrinsic value of a company by calculating Net Present Value (NPV).
Company Overview:
Company: GreenTech Solutions Ltd.
Industry: Renewable energy
Stage: Mid-growth
Objective: Determine the intrinsic value of GreenTech based on 5-year cash flow projections.
Provided Data:
Historical Financial Data (Year 0):
- Revenue: $10,000,000
- EBITDA margin: 25%
- Depreciation & Amortization: $500,000
- Capital Expenditures (CapEx): $1,000,000
- Change in Net Working Capital: $300,000
- Tax rate: 25%
- WACC (Discount Rate): 10%
- Terminal Growth Rate: 3%
Assumptions for Projections (Years 15):
- Revenue growth rate: 8% annually
- EBITDA margin remains constant at 25%
- CapEx increases by 5% annually
- Depreciation remains constant
- Change in Net Working Capital increases by 3% annually
Completion Instructions:
Requirements:
- Project the Income Statement and Cash Flows (Years 15):
- Calculate EBITDA
- Calculate EBIT (EBITDA – Depreciation)
- Compute Taxes (EBIT * Tax Rate)
- Calculate Net Operating Profit After Taxes (NOPAT)
- Compute Free Cash Flow (EBITDA – Taxes – CapEx – Change in NWC)
- Calculate Terminal Value (TV):
- Use the Gordon Growth Model:
- TV = FCF_Year5 * (1 + g) / (WACC – g)
- Use the Gordon Growth Model:
- Calculate Net Present Value (NPV):
- Discount each years FCF and the terminal value using the WACC.
Submission Instructions:
Submit:
- Excel sheet with calculations
- Summary document (12 pages) explaining:
- Key assumptions
- Valuation insights
- Final NPV result and interpretation
Complete and submit the assignment by 23:59 CST Sunday.
Grading Rubric
Your assignment will be graded according to the grading rubric.
| Upload a file, or choose a file you’ve already uploaded. | |
Rubric
Module 7 DCF Valuation Grading Rubric
| Criteria | Ratings | Pts |
|---|---|---|
|
This criterion is linked to a Learning OutcomeAccurate projection of revenues |
|
10 pts |
|
This criterion is linked to a Learning OutcomeCorrect FCF calculations |
|
20 pts |
|
This criterion is linked to a Learning OutcomeTerminal value computation |
|
10 pts |
|
This criterion is linked to a Learning OutcomeProper NPV calculation |
|
20 pts |
|
This criterion is linked to a Learning OutcomeLogical assumptions/explanations |
|
10 pts |
|
This criterion is linked to a Learning OutcomeExcel clarity and formatting |
|
10 pts |
|
This criterion is linked to a Learning OutcomeSummary interpretation/report |
|
20 pts |
Requirements: According to the question
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