- 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 1–5):
- 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 1–5):
- 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 year’s FCF and the terminal value using the WACC.
Submission Instructions:
Submit:
- Excel sheet with calculations
- Summary document (1–2 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.
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Rubric
Module 7 DCF Valuation Grading Rubric
| Criteria | Ratings | Pts |
|---|---|---|
This criterion is linked to a Learning OutcomeAccurate projection of revenues | 10 to >9.0 ptsExcellentAccurate growth calculations; reflects all assumptions correctly.9 to >7.0 ptsGoodMinor errors; generally accurate. 7 to >5.0 ptsNeeds ImprovementSeveral errors or incomplete calculations.5 to >0 ptsDoes Not MeetMajor errors or missing projection. | 10 pts |
This criterion is linked to a Learning OutcomeCorrect FCF calculations | 20 to >18.0 ptsExcellentFully accurate; FCF clearly derived from proper inputs.18 to >14.0 ptsGoodSmall inaccuracies; general method sound. 14 to >9.0 ptsNeeds ImprovementSome incorrect elements; methodology not fully clear.9 to >0 ptsDoes Not MeetWrong or missing FCF calculations. | 20 pts |
This criterion is linked to a Learning OutcomeTerminal value computation | 10 to >9.0 ptsExcellentCorrect model and computation used.9 to >7.0 ptsGoodCorrect approach with minor errors. 7 to >5.0 ptsNeeds ImprovementIncorrect model or missing steps.5 to >0 ptsDoes Not Meet ExpectationsTerminal value missing or invalid. | 10 pts |
This criterion is linked to a Learning OutcomeProper NPV calculation | 20 to >18.0 ptsExcellentCorrectly applies WACC and discounts all cash flows.18 to >14.0 ptsGoodMostly correct with small errors. 14 to >9.0 ptsNeeds ImprovementConcept understood but poorly implemented.9 to >0 ptsDoes Not MeetIncorrect or missing NPV. | 20 pts |
This criterion is linked to a Learning OutcomeLogical assumptions/explanations | 10 to >9.0 ptsExcellentAssumptions are reasonable and clearly stated.9 to >7.0 ptsGoodAssumptions mostly logical with some clarity issues. 7 to >5.0 ptsNeeds ImprovementAssumptions somewhat unclear or weakly justified.5 to >0 ptsDoes Not MeetAssumptions missing or not defensible. | 10 pts |
This criterion is linked to a Learning OutcomeExcel clarity and formatting | 10 to >9.0 ptsExcellentWell-organized, clearly labeled, easy to follow.9 to >7.0 ptsGoodMostly organized with some labeling errors. 7 to >5.0 ptsNeeds ImprovementDisorganized but understandable.5 to >0 ptsDoes Not MeetHard to follow or unformatted. | 10 pts |
This criterion is linked to a Learning OutcomeSummary interpretation/report | 20 to >18.0 ptsExcellentInsightful, clear, and well-written.18 to >14.0 ptsGoodGood insights, minor writing issues. 14 to >9.0 ptsNeeds ImprovementSome insights, limited clarity.9 to >0 ptsDoes Not MeetUnclear, missing, or irrelevant. | 20 pts |