3. Valuation result
DCF Model-
Differing Inputs Constant Growth
Zero
Growth
Free Cash Flow
Growth Rate
2.26% 0.00%
Residual Value $48,316 $48,640
Results Constant Growth
Zero
Growth
Present Value of
Free Cash Flows (2016-2020) $168,626
FV (RV)
The PV (@ T+ 5) of Residual Value.
$654,099 $500,337
PV (RV)
The Value (@ T) of RV @ T+5.
$411,326 $314,634
PV (Operations)
=PV(FCF) + PV(RV)
$579,952 $483,260
PV (Firm)
=PV(Operations) + Non-Op. Assets
$753,026 $656,334
PV (Firm Equity)
=PV(Firm) - Current Debt
$688,564 $591,872
PV (Firm Equity) Per Share $127.75 $109.81
$ Change vs. Current Stock Price $20.27 $2.33
% Change vs. Current Stock Price 19% 2%
4. Why 2.26% Growth?-Competitive Position
Overal & by Segment
▪ Overall Competitve Position
Revenue
($ Millions) 2015
Projected
Growth 2016E 2017E
iPhone 155,041 0.0% 155,041 155,041
Macintosh 25,471 8.3% 27,590 29,886
iPad 23,227 -10.0% 20,904 18,814
Services 19,909 20.0% 23,891 28,669
Other
Products
10,067 15.0% 11,577 13,314
Total 233,715 2.26% 239,004 245,724
5. Other Factors-Lots Unknown
▪ Apple has lots of breathing room financial (Positive)
▪ Flexibility
▪ Shareholder Value
▪ Data Security
▪ Industry Effects (Negative)
▪ Company Specific (Could Go Either Way)
▪ Innovation-What’s Next?
▪ Revenue Opportunity
▪ Threat to Overall Ecosystem
