Effective Tax rate by mgq48337

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									Growth rate for first 5 years =      10%
Growth rate after 5 years =           5%
Cost of capital =                     9%
Tax rate                             20%           20%       20%       20%       20%        20%
                                  Current year      1         2         3         4          5
EBIT                               $150.00       $165.00   $181.50   $199.65   $219.62    $241.58
EBIT(1-t)                          $120.00       $132.00   $145.20   $159.72   $175.69    $193.26
- Reinvestment                      $30.00        $33.00    $36.30    $39.93    $43.92     $48.32
FCFF                                $90.00        $99.00   $108.90   $119.79   $131.77    $144.95
Terminal value                                                                           $3,804.83
Present Value                                    $90.83    $91.66    $92.50    $93.35    $2,567.08
Firm Value                          $2,935.42
    20%
Terminal year
  $253.66
  $202.92
   $50.73
  $152.19
Growth rate for first 5 years =         10%
Growth rate after 5 years =              5%
Cost of capital =                        9%
Tax rate                                20%           40%       40%       40%       40%        40%
                                     Current year      1         2         3         4          5
EBIT                                  $150.00       $165.00   $181.50   $199.65   $219.62    $241.58
EBIT(1-t)                             $120.00        $99.00   $108.90   $119.79   $131.77    $144.95
- Reinvestment                         $30.00        $33.00    $36.30    $39.93    $43.92     $48.32
FCFF                                   $90.00        $66.00    $72.60    $79.86    $87.85     $96.63
Terminal value                                                                              $2,536.55
Present Value                                       $60.55    $61.11    $61.67    $62.23    $1,711.39
Firm Value                             $1,956.94

Deferred Tax Liability =                200
Period over which it will be paid=        4
PV of deferred tax payments =            $161.99
Value of firm net of liability =       $1,794.96
    40%
Terminal year
  $253.66
  $152.19
   $50.73
  $101.46
Growth rate for first 5 years =      10%
Growth rate after 5 years =           5%
Cost of capital =                     9%
Tax rate                             20%           20%       20%       20%       20%        20%
                                  Current year      1         2         3         4          5
EBIT                               $150.00       $165.00   $181.50   $199.65   $219.62    $241.58
EBIT(1-t)                          $120.00       $132.00   $145.20   $159.72   $175.69    $193.26
- Reinvestment                      $30.00        $33.00    $36.30    $39.93    $43.92     $48.32
FCFF                                $90.00        $99.00   $108.90   $119.79   $131.77    $144.95
Terminal value                                                                           $2,536.55
Present Value                                    $90.83    $91.66    $92.50    $93.35    $1,742.79
Firm Value                          $2,111.12

Deferred Tax Liability =             200
Deferred Taxes from first 5 years =$201.47
Period over which it will be paid=    10
PV of deferred tax payments =         $167.45
Value of firm net of liability =    $1,943.67
    40%
Terminal year
  $253.66
  $152.19
   $50.73
  $101.46

								
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