How much is the value of the asset under three scenarios

Reference no: EM132743531

Question: 1. Secure a copy of an annual report of the any publicly listed company in the Philippines. Calculate the growth rate of its EBITDA in the last 3 years. Using the growth rate apply it to project the EBITDA for the next 5 years. All things remain constant. Assume weighted average cost of capital to be 10%, 12% and 15%. What model should be used? How much is the value of that firm? Would you recommend buying the company to be part of your asset?

2. Using your financial model developed in No.1, use the total value of the Noncurrent Assets of the company as the terminal cash flows, would your recommendation change? Why?

3. Using your financial model developed in No.1, scenario where:

a. growth rate is 0%;

b. growth rate is half of what they have historically but purchase new asset based on 20% of the net book value of the property, plant and equipment;

and

c. growth rate is 1.5x of what they have historically but purchase new asset based on 25% of the net book value of the property, plant and equipment.

How much is the value of the asset under three scenarios? What is you recommendation? Why?

Reference no: EM132743531

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