Industrial Hygiene - Week III Assessment Only 100 origina.docx

Industrial Hygiene - Week III Assessment
Only 100% original, non-plagiarized responses, including all
references and
citations.
1. List the six major categories of occupational illnesses, and
give three examples of each.
What are some methods that can be used to control potential
exposures in the workplace?
Your response should be at least 200 words in length. All
sources used, including the
textbook, must be referenced; paraphrased and quoted material
must have accompanying
citations.
2. Discuss the various ways that hazardous chemicals can enter
the human body.
citations.
3. Discuss safe practices that can be used for working with
chemicals in laboratories.

citations.
4. Personal and area monitoring are discussed in Chapter 3.
Define each type of sampling
technique, give an example, and discuss how the data collected
for each is used. Be sure
to include information regarding extractive sampling and direct-
reading methods as well
as the advantages and disadvantages of each.
citations.
5. Organic solvents are a family of compounds that are used
extensively in industry. List
some examples of organic solvents, and discuss how they are
hazardous and what
protective measures can be used to control exposure.
citations.
Data Input SheetSTOCK VALUATION MODELS - DDM
(Dividends & Repurchases)ENTER DATA IN YELLOW-

CODED CELLSNAME OF COMPANYAAPLOUTPUT IN
SUBSEQUENT WORKSHEETSLAST
YEAR2013YearNUMBER OF SHARES OUTSTANDING
(Mil.)5,880.00Millions of SharesMARKET PRICE OF STOCK /
SHARE$107.00Dollars Per ShareNET INCOME AFTER
TAXES$37,037.00Millions of DollarsTOTAL
SALES$170,910.00Millions of DollarsBOOK VALUE OF
EQUITY$123,549.00Millions of DollarsRISK FREE RATE
(Appropriate T- Bill or T-Bond)2.40%Annual Percentage
RateDIVIDENDS PAID (TOTAL)$10,564.00Millions of
DollarsSTOCK REPURCHASES (TOTAL)$22,330.00Millions
of DollarsREQUIRED INFORMATION FOR CALCULATION
OF REQUIRED RATE OF RETURNBETA OF
STOCK0.88MARKET RISK PREMIUM1.76%Expected Market
Risk Premium %REQUIRED INFORMATION FOR VARIABLE
GROWTH RATE VALUATIONSEXPECTED GROWTH RATE
FOR
EARNINGS19.3200%15.9500%16.4100%11.5000%11.5000%E
XPECTED GROWTH RATE (DIVIDENDS & STOCK
REPURCHASES)15.0000%15.0000%15.0000%15.0000%15.000
0%COMPUTER-GENERATED CALCULATIONSEARNINGS
PER SHARE$6.30LAST CASH DIVIDEND & STOCK
REPURCHASE PAYMENT PER SHARE$5.59EXPECTED
ANNUAL GROWTH RATE FOR EARNINGS14.62%Geometric
Mean of Annual RatesEXPECTED ANNUAL GROWTH RATE
(DIVIDENDS & STOCK REPURCHASES)GROWTH RATE
TOO HIGH15.00%Geometric Mean of Annual RatesREQUIRED
RATE OF RETURN (k)3.95%CAPMREQUIRED RATE OF
RETURN (k)21.01%Dividend Discount ModelREQUIRED
RATE OF RETURN (k)12.48%Average of CAPM and Dividend
Discount ModelEXPECTED EARNINGS PER SHARE IN 5
YEARS$12.61SUSTAINABLE RATE OF GROWTH3.35%(ROE
* (1-Payout Ratio))COMPUTER-GENERATED
CALCULATIONSSTOCK VALUE - ZERO GROWTH
MODEL$44.82Not applicable for most stocksSTOCK VALUE -
CONSTANT GROWTH MODEL($255.36)STOCK VALUE -

VARIABLE GROWTH MODEL($255.36)
Must be positive values in each cell
All Data Required
Required Data
Stock Expected ReturnEXPECTED RETURN COMMON
STOCKINPUTSFORMULAk = ( D1 / P0 ) + gLAST DIVIDEND
& STOCK REPURCHASE PER SHARE$5.59PRICE OF
STOCK$107.00EXPECTED GROWTH RATE (DIVIDENDS &
STOCK REPURCHASES)15.00%OUTPUTESTIMATED
REQUIRED RATE OF RETURN (k)21.01%
Stock Price - Zero GrowthPRICE OF COMMON STOCK -
ZERO GROWTH MODELINPUTSFORMULALAST DIVIDEND
& STOCK REPURCHASE PER SHARE$5.59P0 = D0 /
kREQUIRED RATE OF RETURN (ROR)12.48%(Average of
CAPM and Dividend Discount Model)OUTPUTPRICE OF
STOCK$44.82
Stock Price - Constant GrowthPRICE OF COMMON STOCK -
CONSTANT GROWTH MODELINPUTSFORMULAP0 = D1 / (
k - g )LAST CASH/STOCK REPURCHASE PAYMENT PER
SHARE$5.59REQUIRED RATE OF RETURN
(ROR)12.48%EXPECTED ANNUAL GROWTH
RATE15.00%(Dividends + Stock Repurchases)k must >
gOUTPUTPRICE OF STOCK($255.36)
Stock Price - Variable GrowthPRICE OF STOCK - VARIABLE
GROWTH MODELINPUTSLAST YEAR (e.g.,
1996)201320142015201620172018LAST CASH & STOCK
ANNUAL GROWTH RATE (DIVIDENDS + STOCK
REPURCHASES)15.00%15.00%15.00%15.00%15.00%REQUIR
ED RATE OF RETURN12.48%(ROR or k)FORMULAP0
=Present Value of DividendsPlusPresent Value of Future Stock
PriceOUTPUT20142015201620172018DIVIDENDS$6.43$7.40$
8.51$9.78$11.25FUTURE PRICE($446.62)NON-
DISCOUNTED CASH
FLOWS$6.43$7.40$8.51($436.84)PRESENT VALUE($255.36)
Stock Price - Div and EarningsPRICE OF STOCK - DIVIDEND

AND EARNINGS APPROACHINPUTSPRESENT STOCK
PRICE$107.00LAST CASH & STOCK REPURCHASE
PAYMENT PER SHARE$5.59EXPECTED ANNUAL GROWTH
RATE (DIVIDENDS & STOCK REPURCHASES)15.00%For 5
YearsESTIMATED STOCK PRICE$0.00In 5 YearsREQUIRED
RATE OF RETURN (ROR)12.48%FORMULAP0 =Present
Value of DividendsPlusPresent Value of Future Stock
PriceOUTPUT20132014201520162017$6.43$7.40$8.51$9.78$1
1.25CASH + STOCK REPURCHASE PMT PER
SHARE$0.00FUTURE VALUE OF
STOCK$5.72$5.85$5.98$6.11$6.25PRESENT VALUESPRICE
OF STOCK$29.91
Sheet8
&A
Page &P
Sheet9
&A
Page &P
Sheet10
&A
Page &P
Sheet11
&A
Page &P
Sheet12
&A
Page &P
Sheet13
&A
Page &P
Sheet14
&A
Page &P
Sheet15
&A
Page &P

Sheet16
&A
Page &P
HW1 #1 - 8HOMEWORK SET 1 TEMPLATEBalance
Sheet201220132014eFree Cash Flow
CalculationCash$9,000$7,282$14,000201220132014e Short-
term
investments48,60020,000$71,632EBIT$209,100$17,440($880,0
00)Accounts
receivable351,200632,160$878,000Taxes($83,640)($6,976)$352
,000Inventories715,2001,287,360$1,716,480Depreciation18,900
116,960120,000Total current
assets$1,124,000$1,946,802$2,680,112NOPAT$144,360$127,42
4($408,000)Gross fixed assets491,0001,202,950$1,220,000Less:
Accumulated depreciation146,200263,160$383,160Net fixed
assets$344,800$939,790$836,840Operating Current
Asset$1,075,400$1,926,802$2,608,4800.4Total
assets$1,468,800$2,886,592$3,516,952Operating Current
Liabilities$281,600$608,960$739,800Net Op Working
Capital$793,800$1,317,842$1,868,680$0Liabilities and
EquityAccounts payable$145,600$324,000$359,800Notes
payable200,000720,000$300,000Operating Long-term
Assets$344,800$939,790$836,840Accruals136,000284,960$380,
000Total current liabilities$481,600$1,328,960$1,039,800Net
Operating Capital1,138,6002,257,6322,705,520Long-term
debt323,4321,000,000$500,000Change in Net Operating
Capital1,119,032447,888Common stock (100,000
shares)460,000460,000$1,680,936Free Cash
Flow($991,608)($855,888)Retained
earnings203,76897,632$296,216Total
equity$663,768$557,632$1,977,152Total liabilities and
equity$1,468,800$2,886,592$3,516,952Ratio
Analysis201220132014eIndustry
AverageCurrent2.31.52.62.7Quick0.80.50.91Inventory
turnover4.04.04.06.1Income Statements201220132014eDays

sales outstanding
(DSO)37.439.549.332Sales$3,432,000$5,834,400$6,500,000Fix
ed assets turnover10.06.27.87Cost of goods sold except
depr.2,864,0004,980,0006,700,000Total assets
turnover2.32.01.82.5Depreciation and
amortization18,900116,960180,000Debt
ratio35.6%59.6%22.7%32.00%Other
expenses340,000720,000500,000Liabilities-to-assets
ratio54.8%80.7%43.8%50.00%Total operating
costs$3,222,900$5,816,960$7,380,000TIE3.30.1-
9.36.2EBIT$209,100$17,440($880,000)EBITDA
coverage2.60.8-4.98Interest expense62,500176,00095,000Profit
margin2.6%-1.6%-
9.0%3.60%EBT$146,600($158,560)($975,000)Basic earning
power14.24%0.60%-25.02%17.80%Taxes (40%)58,640-63,424-
390,000ROA6.0%-3.3%-16.6%9.00%Net
income$87,960($95,136)($585,000)ROE13.3%-17.1%-
29.6%17.90%Sum of NI and Depreciation$21,824-
$405,000Price/Earnings (P/E)9.7-6.3-5.216.2Price/Cash
flow8.027.5-7.57.6Other
Data201220132014eMarket/Book1.31.11.52.9Stock
price$8.50$6.00$12.17Equity Multiplier2.25.21.8Shares
outstanding100,000100,000250,000Du Pont 13.3%-17.1%-
29.6%EPS$0.88($0.95)$1.104DPS$0.220.110.22Tax
rate40%40%40%Book value per share$6.64$5.58$7.909Lease
payments$40,000$40,000$40,0001. What is the free cash flow
for 2014?Free Cash Flow for 2014 =($855,888)NOPAT = EBIT
*(1-Tax rate)(880,000) *(1-0.4) = (528000) which is the
NOWCbut NOWC =(Operating Current Assets – Operating
Current Liabilities)(Rest of Calculations shown in the above
table)2. Suppose Congress changed the tax laws so that
Berndt's depreciation expenses doubled.No changes in
operations occurred. What would happen to reported profit and
to net cash flow?If Congress changed the tax laws so that the
depreciation expenses doubled, the depreciation expenses would
now become$240,000 and hence the income before tax would be

reduced to zero and hence also the profit. The net cash flow and
reportedincome will increase due to the increase in
depreciation.i.e Net cashflow = $253584 + $240000 =
$4935843. Calculate the 2014 current and quick ratios based on
the projected balance sheet and income statement data.2014
Current Ratio =2.62014 Quick Ratio =0.9 What can you
say about the company's liquidity position in 2014?The
company's liquidity position in 2014 improved greatly from
2013 and its very close to the liquidity position of the industry.
This implies that the company is in a better position to meet its
current obligations without facing cashflow problems since
these ratios are very close to the industry ratios.4. Calculate the
2014 inventory turnover, days sales outstanding (DSO), fixed
assets turnover, andtotal assets turnover.2014 Inventory
turnover4.02014 Days sales outstanding49.32014 Fixed assets
turnover7.82014 Total assets turnover1.85. Calculate the 2014
debt ratio, liabilities-to-assets ratio, times-interest-earned, and
EBITDA coverage ratios.2014 Debt ratio22.75%2014 Liabilities
to assets43.78%2014 Times interest earned-9.32014 EBITDA
coverage-4.9 What can you concluded from these
ratios?The company's debt ratio and liabilities to asset ratios for
2014 are lower than those of the industry which is desirable
because this implies that the company is not facing risk of
beingdeclared insolvent because of burden of servicing high
interests arising from many liabilitiesHowever, the TIE and the
EBITDA coverage ratios are lower implying that the ability of
the company to service its debts is poor. 6. Calculate the 2014
profit margin, basic earning power (BEP), return on assets
(ROA) and return on equity (ROE).2014 Profit Margin-
9.0%2014 Basic earning power-25.02%2014 Return on assets-
16.63%2014 Return on equity-29.59% What can you say
about these ratios?From the above calculations, its evident that
all these ratios are below the industry's average. In addition,
they are lower than previous year's ratios. This implies thatthe
firm is experiencing poor perfomance compared to the industry.
Its profits, earning power and its efficiency in the utilization of

assets to make returns is lower compared to the industry7.
Calculate the 2014 price / earnings ratio, price / cash flow ratio,
and market / book ratio.2014 Price / earnings-5.22014 Price /
cash flow-7.52014 Market / book1.58. Use the extended DuPont
equation to provide a summary and overview of company's
financial condition projected for 2014.2014 ROE = -29.6%
What are the firm's major strengths and
weaknesses?strengthsThe company's fixed asset turnover is
above the industry average. However, if the company's assets
are older than the industry's assets, this could be used to explain
the higher ratio.This is because the firms' assets could have
been depreciated for a longer period and also would have a
lower historical costsThe firms' liabilities to assets ratio and
debt ratios are lower than those of the industry. This implies
that the firm has managed to reduce its external liablities
relative to its assets over the past one year. This implies that the
firm's solvency is better compared to that of the
industryweaknessesThe firm's current and quick ratios are lower
than those of the industry implying that the liquidity position is
poor comapred to that of the industryMost of the asset
management ratios are lower than those of the industry (except
the fixed asset turnover, debt ratio and liablities to assets ratio).
This implies that the firm's efficiencyin management of its
assets to earn profits is poor relatove to that of the industryThe
firm's profitability ratios are lower than those of the industry
implying that the firm is earning poor profits comapred to the
industry.
Sheet
Free Cash Flow Valuation ModelName of CompanySAMPLE
COMPANY (MKC)Estimate Basic Information & Growth
RatesInitial Free Cash Flow$337.00Computer CalculatesInitial
Period Annual Growth Rate Estimate4.00%See Note 1Terminal
Annual Growth Rate Estimate2.00%See Note 2How Long is
Initial Growth Period (Years)10Years 0 Up to 20Number of

Shares of Common Stock120.40Tax Rate Estimated During
Future Periods30.00%Total Interest-Bearing Permanent Debt
Outstanding Estimated During Period$1,000.00Total
Assets$3,500.00Estimate Free Cash FlowFrom Current Sales ($)
Estimate Future Annual Sales ($)$3,400.00From EBIT Margin
(%) Estimate Future EBIT Margin
(%)15.00%EBIT$510.00Computer CalculatesPlus - Future
Annual Estimated Depreciation Expense$100.00Less - Future
Annual Estimated Capital Expenditures$100.00Less - Net
Annual Estimated Change (Invest.) in Working
Capital$20.00Equals Operating Cash Flow$490.00Computer
CalculatesLess Taxes$153.00Computer Calculates - See Note
3Equals Free Cash Flow$337.00Computer CalculatesEstimate
Weighted Average Cost of CapitalCost of Equity
Capital8.600%Computer CalculatesBefore Tax Cost of Debt
Estimated During Future Periods6.500%Market Risk Premium
(RM-RF) Estimated During Future Periods6.000%Debt Ratio
(Total Debt/Total Assets) Estimated During Future
Periods28.571%Computer CalculatesBeta Estimated During
Future Periods0.600Risk-free Rate (Use L-T Treasury Rate)
Estimated During Future Periods5.000%= Weighted Average
Cost of Capital7.443%Computer
CalculatesYear01234567891011121314151617181920Free Cash
Flow$0$350$364$379$394$410$426$443$461$480$499$0$0$0
$0$0$0$0$0$0$0Terminal
Value$9,348$0$0$0$0$0$0$0$0$0$0Total
FCF$0$350$364$379$394$410$426$443$461$480$9,847$0$0$0
$0$0$0$0$0$0$0Discounted
FCF$0$326$316$306$296$286$277$268$260$251$4,803$0$0$0
$0$0$0$0$0$0$0Net Present Value of FCF$7,390Net Present
Value of FCF Minus Debt$6,390Per Share Value$53.07Notes:1.
Terminal Value is growing perpetuity of final year's Free Cash
Flow [(FCF) / (WACC - Growth Rate)]2. If Number of years of
projected growth is "0", then Net Present Value of Free Cash
Flows is growing perpetuity of Free Cash Flow
[(FCF*(1+Growth Rate) / (WACC - Growth Rate)3. Taxes are

determined by multiplying the Tax Rate times EBIT.
Note: Terminal Growth Rate Must be less than WACC for
projections of 1 or more years; for valuations based on 0 years
of projections, WACC must be > Growth Rate
FREE CASH FLOW VALUATION MODEL
Sheet2
Sheet3
PREPARING THE DDM (Dividend Discount Model)
VALUATION
The assignment this week involves completion of a dividend
discount model valuation of the company that you are studying
this term. That analysis should involve an Excel model to
perform the valuation; you are welcome to use Prof. Stevens’
model (attached here) or you may develop your own.
There are a number of assumptions and issues that need to be
examined in the DDM analysis (e.g., cost of equity, cost of
debt, market risk premium, risk, cash flows – dividends and
repurchases, etc. Those variables need to be entered into the
yellow-coded cells.
The data input for this model is on the first worksheet; the
various valuations (e.g., zero growth, constant growth, variable
growth) are developed automatically in the subsequent
worksheets in the workbook (it is not necessary to enter
additional data in the subsequent worksheets. This model
contemplates using both dividends and stock repurchases.
Data Input SheetSTOCK VALUATION MODELS - DDM
(Dividends & Repurchases)ENTER DATA IN YELLOW-
CODED CELLSNAME OF COMPANYSample

CompanyOUTPUT IN SUBSEQUENT WORKSHEETSLAST
YEAR2013YearNUMBER OF SHARES OUTSTANDING
(Mil.)1,848.96Millions of SharesMARKET PRICE OF STOCK /
SHARE$27.92Dollars Per ShareNET INCOME AFTER
TAXES$7,237.00Millions of DollarsTOTAL
SALES$162,558.00Millions of DollarsBOOK VALUE OF
EQUITY$27,537.00Millions of DollarsRISK FREE RATE
(Appropriate T- Bill or T-Bond)4.92%Annual Percentage
RateDIVIDENDS PAID (TOTAL)$2,290.00Millions of
DollarsSTOCK REPURCHASES (TOTAL)$371.00Millions of
DollarsREQUIRED INFORMATION FOR CALCULATION OF
REQUIRED RATE OF RETURNBETA OF
STOCK0.95MARKET RISK PREMIUM1.00%Expected Market
Risk Premium %REQUIRED INFORMATION FOR VARIABLE
GROWTH RATE VALUATIONSEXPECTED GROWTH RATE
FOR
EARNINGS7.0000%6.0000%5.0000%5.0000%5.0000%EXPECT
ED GROWTH RATE (DIVIDENDS & STOCK
REPURCHASES)5.0000%5.0000%5.0000%5.0000%5.0000%CO
MPUTER-GENERATED CALCULATIONSEARNINGS PER
SHARE$3.91LAST CASH DIVIDEND & STOCK
ANNUAL GROWTH RATE FOR EARNINGS5.55%Geometric
Mean of Annual RatesEXPECTED ANNUAL GROWTH RATE
(DIVIDENDS & STOCK REPURCHASES)5.00%Geometric
Mean of Annual RatesREQUIRED RATE OF RETURN
(k)5.87%CAPMREQUIRED RATE OF RETURN
(k)10.41%Dividend Discount ModelREQUIRED RATE OF
RETURN (k)8.14%Average of CAPM and Dividend Discount
ModelEXPECTED EARNINGS PER SHARE IN 5
YEARS$5.14SUSTAINABLE RATE OF GROWTH16.62%(ROE
* (1-Payout Ratio))COMPUTER-GENERATED
CALCULATIONSSTOCK VALUE - ZERO GROWTH
MODEL$17.68Not applicable for most stocksSTOCK VALUE -
CONSTANT GROWTH MODEL$48.11STOCK VALUE -
VARIABLE GROWTH MODEL$48.11

Must be positive values in each cell
All Data Required
Required Data
Stock Expected ReturnEXPECTED RETURN COMMON
STOCKINPUTSFORMULAk = ( D1 / P0 ) + gLAST DIVIDEND
& STOCK REPURCHASE PER SHARE$1.44PRICE OF
STOCK$27.92EXPECTED GROWTH RATE (DIVIDENDS &
STOCK REPURCHASES)5.00%OUTPUTESTIMATED
REQUIRED RATE OF RETURN (k)10.41%
Stock Price - Zero GrowthPRICE OF COMMON STOCK -
ZERO GROWTH MODELINPUTSFORMULALAST DIVIDEND
& STOCK REPURCHASE PER SHARE$1.44P0 = D0 /
kREQUIRED RATE OF RETURN (ROR)8.14%(Average of
CAPM and Dividend Discount Model)OUTPUTPRICE OF
STOCK$17.68
Stock Price - Constant GrowthPRICE OF COMMON STOCK -
CONSTANT GROWTH MODELINPUTSFORMULAP0 = D1 / (
k - g )LAST CASH/STOCK REPURCHASE PAYMENT PER
SHARE$1.44REQUIRED RATE OF RETURN
(ROR)8.14%EXPECTED ANNUAL GROWTH
RATE5.00%(Dividends + Stock Repurchases)k must >
gOUTPUTPRICE OF STOCK$48.11
Stock Price - Variable GrowthPRICE OF STOCK - VARIABLE
GROWTH MODELINPUTSLAST YEAR (e.g.,
1996)201320142015201620172018LAST CASH & STOCK
ANNUAL GROWTH RATE (DIVIDENDS + STOCK
REPURCHASES)5.00%5.00%5.00%5.00%5.00%REQUIRED
RATE OF RETURN8.14%(ROR or k)FORMULAP0 =Present
Value of DividendsPlusPresent Value of Future Stock
PriceOUTPUT20142015201620172018DIVIDENDS$1.51$1.59$
1.67$1.75$1.84FUTURE PRICE$58.47NON-DISCOUNTED
CASH FLOWS$1.51$1.59$1.67$60.22PRESENT VALUE$48.11
Stock Price - Div and EarningsPRICE OF STOCK - DIVIDEND
AND EARNINGS APPROACHINPUTSPRESENT STOCK
PRICE$27.92LAST CASH & STOCK REPURCHASE

PAYMENT PER SHARE$1.44EXPECTED ANNUAL GROWTH
RATE (DIVIDENDS & STOCK REPURCHASES)5.00%For 5
YearsESTIMATED STOCK PRICE$0.00In 5 YearsREQUIRED
RATE OF RETURN (ROR)8.14%FORMULAP0 =Present Value
of DividendsPlusPresent Value of Future Stock
PriceOUTPUT20132014201520162017$1.51$1.59$1.67$1.75$1.
84CASH + STOCK REPURCHASE PMT PER
SHARE$0.00FUTURE VALUE OF
STOCK$1.40$1.36$1.32$1.28$1.24PRESENT VALUESPRICE
OF STOCK$6.59
Sheet8
&A
Page &P
Sheet9
&A
Page &P
Sheet10
&A
Page &P
Sheet11
&A
Page &P
Sheet12
&A
Page &P
Sheet13
&A
Page &P
Sheet14
&A
Page &P
Sheet15
&A
Page &P
Sheet16
&A

Page &P
ValuePro.net
ONLINE DCF VALUATION MODEL: ValuePro is an online
calculator that prepares DCF valuations for most publicly traded
stocks. It provides an input sheet with 20 variables that are used
in the valuation. The analyst can accept the given inputs, or
change them (it is usually necessary to change a couple of them;
the growth rate is normally overstated and the equity risk
premium is normally understated). The model calculates the
Free Cash Flows to the Firm (FCFF) and then derives the
intrinsic value of the stock.
The model calculates the free cash flows to the firm (FCFF) for
each of the years during the "Excess Return Period." The
analyst can specify the length of this period up to 10 years. The
model then calculates the "Corporate Residual Value," the value
of the firm beyond the Excess Return Period. That Corporate
Residual Value is calculated by capitalizing the Net Operating
Profit After Tax (NOPAT) by the Weighted Average Cost of
Capital, and then discounting that value back to the present
(also at the weighted average cost of capital).
The website can be located at http://www.valuepro.net.
Using ValuePro.net
The purpose of this note is to make sure that you are clear, and
comfortable, in using ValuePro.net to conduct a discounted cash
flow valuation of a stock.
The link to the valuation website is: http://www.valuepro.net
The first step after arriving at the ValuePro website is to enter
the ticker symbol of the stock that is to be valued. Then click
"Get Baseline Valuation."
You will then see a page that shows the variables that were used
in the valuation, and the "Intrinsic Stock Value" in the upper

left side of the screen.
Normally, some of the inputs used in the valuation need to be
changed. For example, the baseline "Equity Risk Premium %" is
3%. In fact, this measure has historically been in the range of
5% to 6%.
Also, "Growth Rate %" (Revenue growth rate) is often
overestimated and needs to be adjusted to a more realistic, and
supportable, level.
The "Bond Spread Treasury %" normally requires an
adjustment. And, often, a case can be made to change some of
the company-specific variables.
It is always useful to review the "Cash Flows" generated by the
discounted cash flow analysis. That analysis can be obtained by
clicking on the tab at the top of the page "Cash Flows."
Please note a couple of things:
A. The input sheet reveals the definitions of the variables if you
click on their titles. For example, a click on "Company Beta"
and will open a box with a definition.
B. Don't try to change the "Company WACC%" by changing
that variable itself. The WACC (Weighted Average Cost of
Capital) is computed based on the other inputs. If it is your
intent to increase or decrease the WACC, then change the
related variables like "10-Yr. Treasury Yield %", "Company
Beta", "Equity Risk Premium", "Preferred Stock Yield %" (if
any preferred stock is outstanding), "Tax Rate %", or the "Bond
Spread Treasury %". All of these variables have an influence on
the company's WACC.
Then, after making the changes in assumptions, it is necessary

to click the tab towards the top of the page "Recalculate." When
that is done, it will return a revised "Intrinsic Stock Value,"
which, in the case of this example, changed it from $64.06 to
$40.78.
Now, your task is to determine what variables should be
changed and the reasons for the changes. Once those changes
are made, then a new "Intrinsic Stock Value" can be determined
based on your inputs. It is your job as an analyst to make sure
that the input variables make sense and are reasonable. Only
then can you justify the estimated intrinsic value of the stock.

Industrial Hygiene - Week III Assessment Only 100 origina.docx

Recommended

Recommended

More Related Content

Similar to Industrial Hygiene - Week III Assessment Only 100 origina.docx

Similar to Industrial Hygiene - Week III Assessment Only 100 origina.docx (20)

More from dirkrplav

More from dirkrplav (20)

Recently uploaded

Recently uploaded (20)

Industrial Hygiene - Week III Assessment Only 100 origina.docx