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SWOT Analysis

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Shows both the Free Cash Flow to Firm and Equity components of the valuation of an enterprise.
Free Cash Flow to the Firm versus Free Cash Flow to Equity
Inputs
Earnings before interest and taxes =
Expected growth for next 5 years =
Expected growth after year 5 =
Tax rate =
Debt ratio for the firm =
Cost of equity =
Pre-tax cost of debt =
Return on capital in high growth=
Return on capital in stable growth =

100
10%
5%
40%
20%
12%
7%
12%
10%
0

Expected Growth rate

Reinvestment rate
EBIT
Taxes
EBIT(1-t)
- Reinvestment
FCFF
Terminal Value
Present Value

$100.00

1
10%
83.33%
$110.00
$44.00
$66.00
$55.00
$11.00

2
10%
83.33%
$121.00
$48.40
$72.60
$60.50
$12.10

3
10%
83.33%
$133.10
$53.24
$79.86
$66.55
$13.31

4
10%
83.33%
$146.41
$58.56
$87.85
$73.21
$14.64

$9.96

$9.92

$9.88

$9.84

Value of Firm =
Value of Equity =
Value of Debt =

$617.01
$493.61
$123.40

$670.42

728.31

791.04

858.98

EBIT
Interest Exp
EBT
Taxes
Net Income
- Reinvestment
+ New Debt Issued
FCFE
Terminal Value of Equity
Present Value
Value of Equity =

$100.00

$110.00
$8.64
$101.36
$40.54
$60.82
$55.00
$10.68
$16.50

$121.00
$9.39
$111.61
$44.65
$66.97
$60.50
$11.58
$18.05

$133.10
$10.20
$122.90
$49.16
$73.74
$66.55
$12.55
$19.74

$146.41
$11.07
$135.34
$54.13
$81.20
$73.21
$13.59
$21.58

$14.73

$14.39

$14.05

$13.72

$134.08

$145.66

$158.21

$171.80

12.00%
7.00%
4.20%

12%
7%
4%

12.00%
7.00%
4.20%

12.00%
7.00%
4.20%

Capital Structure
Debt at end of year
Cost of Equity
Pre-tax Cost of Debt
After-tax Cost of Debt

$493.61

$123.40

Cost of Capital

10.44%

10.44%

10.44%

10.44%

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About WikiWealth

tion of an enterprise.

low to Equity

5 Terminal Year
10%
5%
83.33%
50.0%
$161.05
$169.10
$64.42
$67.64
$96.63
$101.46
$80.53
$50.73
$16.11
$50.73
$932.56
$577.40
$932.56

$161.05
$12.03
$149.03
$59.61
$89.42
$80.53
$14.71
$23.60
$746.05
$436.72

$169.10
$13.06
$156.05
$62.42
$93.63
$50.73
$9.33
$52.22

$186.51

$195.84

12.00%
7.00%
4.20%

12.00%
7.00%
4.20%

10.44%

10.44%

C34:
! This is the present value of the cash flows to the firm starting in each year; year 2, year 3
C35:
! Equity as % of value
C36:
! Debt as % of value
B44:
! This is the new debt issued each year
B51:
! This is 30% of each year's firm value
B56:
! Computed using a 70% Equity; 30% Debt ratio