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# Equity Analysis Excel Model

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This is a Equity Analysis Model in Excel. This Tool is very helpful in the development of a Business Case.

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### Equity Analysis Excel Model

1. 1. CAPITAL BUDGETING WORKSHEET 5 Equity Analysis of a Project INPUT SHEET: USER ENTERS ALL BOLD NUMBERS IN YELLOW CELLS INITIAL INVESTMENT CASHFLOW DETAILS Initial Investment= Opportunity cost (if any)= Lifetime of the investment Salvage Value at end of project= Deprec. method(1:St.line;2:DDB)= Revenues in year 1= \$100,000 Var. Expenses as % of Rev= \$5,000 DISCOUNT RATE Approach(1:Direct;2:CAPM)= \$65,000 1 1. Discount rate = 13% 10 Fixed expenses in year 1= \$15,000 \$50,000 Tax rate on net income= 33% 2a. Beta= b. Riskless rate= 3% 0.6 5.00% Other invest.(non-depreciable)= 1 If you do not have the breakdown of fixed and variable c. Market risk premium = 5.50% 10% expenses, input the entire expense as a % of revenues. d. Debt Ratio = 12.00% e. Cost of Borrowing = 12.00% Discount rate used= Tax Credit (if any )= 3.00% 0 WORKING CAPITAL Initial Investment in Work. Cap= \$10,000 Working Capital as % of Rev= 10% Salvageable fraction at end= 100% GROWTH RATES 1 2 3 4 5 6 7 8 9 10 Revenues Do not enter 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Fixed Expenses Do not enter 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 4 5 6 7 8 9 10 Default: The fixed expense growth rate is set equal to the growth rate in revenues by default. YEAR 0 1 2 3 INITIAL INVESTMENT Investment - Tax Credit Net Investment + Working Cap + Opp. Cost + Other invest. Initial Investment \$100,000 \$10,000 \$90,000 \$10,000 \$5,000 \$0 \$105,000 Equipment Working Capital Lifetime Index Revenues -Var. Expenses - Fixed Expenses EBITDA - Depreciation EBIT -Tax EBIT(1-t) + Depreciation - ∂ Work. Cap NATCF Discount Factor Discounted CF \$0 \$0 (\$105,000) 1 (\$105,000) 1 \$65,000 \$8,450 \$15,000 \$41,550 \$5,000 \$36,550 \$12,062 \$24,489 \$5,000 (\$3,500) \$32,989 1.03 \$32,028 \$0 \$0 1 \$68,250 \$8,873 \$15,750 \$43,628 \$5,000 \$38,628 \$12,747 \$25,880 \$5,000 (\$3,175) \$34,055 1.0609 \$32,101 SALVAGE VALUE \$0 \$0 \$0 \$0 \$0 \$0 \$0 \$0 OPERATING CASHFLOWS 1 1 1 1 \$71,663 \$75,246 \$79,008 \$82,958 \$9,316 \$9,782 \$10,271 \$10,785 \$16,538 \$17,364 \$18,233 \$19,144 \$45,809 \$48,099 \$50,504 \$53,029 \$5,000 \$5,000 \$5,000 \$5,000 \$40,809 \$43,099 \$45,504 \$48,029 \$13,467 \$14,223 \$15,016 \$15,850 \$27,342 \$28,877 \$30,488 \$32,180 \$5,000 \$5,000 \$5,000 \$5,000 \$3,841 \$358 \$376 \$395 \$28,501 \$33,518 \$35,112 \$36,785 1.092727 1.12550881 1.159274074 1.194052297 \$26,082 \$29,781 \$30,288 \$30,807 \$0 \$0 1 \$87,106 \$11,324 \$20,101 \$55,681 \$5,000 \$50,681 \$16,725 \$33,956 \$5,000 \$415 \$38,541 1.229873865 \$31,338 \$0 \$0 \$0 \$0 \$50,000 \$10,084 1 1 1 \$91,462 \$96,035 \$100,836 \$11,890 \$12,484 \$13,109 \$21,107 \$22,162 \$23,270 \$58,465 \$61,388 \$64,458 \$5,000 \$5,000 \$5,000 \$53,465 \$56,388 \$59,458 \$17,643 \$18,608 \$19,621 \$35,822 \$37,780 \$39,837 \$5,000 \$5,000 \$5,000 \$436 \$457 \$480 \$40,386 \$42,323 \$44,356 1.266770081 1.304773184 1.343916379 \$31,881 \$32,437 \$77,713 Investment Measures NPV = \$249,454 IRR = 30.20% ROC = 40.86% Book Value (beginning) Depreciation BV(ending) \$100,000 \$100,000 \$5,000 \$95,000 \$95,000 \$5,000 \$90,000 BOOK VALUE & DEPRECIATION \$90,000 \$85,000 \$80,000 \$5,000 \$5,000 \$5,000 \$85,000 \$80,000 \$75,000 \$75,000 \$5,000 \$70,000 \$70,000 \$5,000 \$65,000 \$65,000 \$5,000 \$60,000 \$60,000 \$5,000 \$55,000 \$55,000 \$5,000 \$50,000