You are interested in buying a small day clinic in Frankfurt. You get the following financial forecasts (in mio €):
t = 0 1 2 3, 4, 5, …
Current Assets 300,00 315,00 330,75 330,75
Fixed Assets 750,00 787,50 826,88 826,88
Total Assets 1050,00 1102,50 1157,63 1157,63
Current Liabilities 30,00 31,50 33,08 33,08
Long term Liabilities 300,00 328,04 381,59 381,59
Equity 720,00 742,97 742,97 742,97
Total Capital 1050,00 1102,50 1157,63 1157,63
Sales 1500,00 1575,00 1653,75 1653,75
CoGS 1350,00 1421,25 1492,32 1488,38
Depreciation 75,00 75,00 78,75 82,70
Interest 12,00 13,13 15,27 15,27
Taxes 18,90 19,70 20,22 20,22
Net Income 44,10 45,93 47,19 47,19
Calculate the “Free Cash Flows”.
The cost of debt is 4.3% p.a. and the beta is 0.95. Calculate with an equity risk premium of 5% and assume that the firm’s debt ratio in future periods is 30% on average. How large is the WACC?
What is a fair price to pay for the company? Provide the “firm value” as well as the “equity value”.
