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    Sampa Video Case Solution

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    rahulsinhadps
    This document contains financial information for Radio One from 2001-2016 including particulars like BCF, EBITDA, EBIT, FCFF, and PVCF. It also contains calculations to determine Radio One's cost of equity (CoE), weighted average cost of capital (WACC), and valuation multiples. The key details are: 1) FCFF and PVCF are calculated for 2001-2004 and projections are provided for 2004-2016. 2) Radio One's asset beta is calculated to be 0.82 based on the capital structure. 3) The cost of equity is then determined to be 11.47% based on the asset beta and market risk premium. 4) The

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    Sampa Video Case Solution

    Uploaded by

    rahulsinhadps
    57 views10 pages
    This document contains financial information for Radio One from 2001-2016 including particulars like BCF, EBITDA, EBIT, FCFF, and PVCF. It also contains calculations to determine Radio One's cost of equity (CoE), weighted average cost of capital (WACC), and valuation multiples. The key details are: 1) FCFF and PVCF are calculated for 2001-2004 and projections are provided for 2004-2016. 2) Radio One's asset beta is calculated to be 0.82 based on the capital structure. 3) The cost of equity is then determined to be 11.47% based on the asset beta and market risk premium. 4) The

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    Sampa Video Case Solution

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    This document contains financial information for Radio One from 2001-2016 including particulars like BCF, EBITDA, EBIT, FCFF, and PVCF. It also contains calculations to determine Radio One's cost of equity (CoE), weighted average cost of capital (WACC), and valuation multiples. The key details are: 1) FCFF and PVCF are calculated for 2001-2004 and projections are provided for 2004-2016. 2) Radio One's asset beta is calculated to be 0.82 based on the capital structure. 3) The cost of equity is then determined to be 11.47% based on the asset beta and market risk premium. 4) The

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    57 views10 pages

    Sampa Video Case Solution

    Uploaded by

    rahulsinhadps
    This document contains financial information for Radio One from 2001-2016 including particulars like BCF, EBITDA, EBIT, FCFF, and PVCF. It also contains calculations to determine Radio One's cost of equity (CoE), weighted average cost of capital (WACC), and valuation multiples. The key details are: 1) FCFF and PVCF are calculated for 2001-2004 and projections are provided for 2004-2016. 2) Radio One's asset beta is calculated to be 0.82 based on the capital structure. 3) The cost of equity is then determined to be 11.47% based on the asset beta and market risk premium. 4) The

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 10

    Particulars 2001 2002 2003 2004

    BCF 76436 89711 101966 115277


    (Corp Ex) 3849 4334 4800 5275
    EBITDA 72587 85377 97166 110002
    (D&A) 90420 90840 91260 91680
    EBIT -17833 -5463 5906 18322
    EBIAT -10700 -3278 3544 10993
    D&A 90420 90840 91260 91680
    "-Delta Capex -2100 -2100 -2100 -2100
    "-Delta NWC" -2377
    FCFF 75493 83038 90374 1613386.504
    PVIF 0.903016074 0.815438029 0.736353648 0.66493918
    PVCF 68171 67712 66547 1072804
    EV 1275235
    Market Value of Equity = EV - Debt of 1999 + Cash of 1999
    = 1198830
    BCF Multiple = 18.43 //Not to be diluted
    We want to value only new markets
    Year Corporate Expeneses
    1997 6.66%
    1998 6.07%
    1999 5.09%
    2000 2.65%
    2001 2.73%
    2002 2.80%
    //Case Data (21xCapex per year) 2003 2.92%
    2004 3.06%
    Considering g of 4% Assume Corp Ex to be 3% of net revenue
    TV = 1515190.504

    Year Capex
    2001 2100
    2002 2100
    There is a constraint in g. Make sure
    that the g in terminal phase is lower 2003 2100
    than the g of the economy 2004 2100

    (Interest Exp 1999/Int Bearing of 1998)*100


    Post Tax CoD
    CoE =
    =

    Asset Beta = EqBeta(E/V)+DebtBeta(D/V)


    Radio One Asset Beta

    Therefore, CoE =

    WACC =
    =
    Decrease in
    trend

    Increase in
    trend

    Dep. Data from exhibit 9 footnote Total Depreciation


    420 90000 90420
    840 90000 90840
    1260 90000 91260
    1680 90000 91680

    of 1998)*100 = 11.60% = PreTax CoD


    = 6.96%
    rf + Beta*Rm
    6.35+Equity Beta*5.5 //Assuming 5.5%
    = 0.82 = (EqB x 420256/(420256+82626))+(0.25*(82626/
    "=>" EqBeta = 0.93

    11.47

    6.96*0.16+0.84*11.47
    10.75
    420256+82626))+(0.25*(82626/502882)
    Particulars 2004 2005 2006 2007
    EBITDA 110002 121002 133102 146413
    (D&A) 91680 92100 92100 92100
    EBIT 18322 28902 41002 54313
    EBIAT(Tax is 40%) 10993 17341 24601 32588
    "+D&A 91680 92100 92100 92100
    "-Delta Capex -2100 -2100 -2100 -2100
    "-NWC -2377 -2615 -2876 -3164
    FCFF 98196 104727 111725 119424
    PVIF 0.664 0.600 0.541 0.489
    PVCF 65202 62794 60494 58391
    EV 1173923 //The main difference between EV from prev
    Equity Value = EV - Debt + Cash
    = 1097518
    BCF Multiple = 16.87425586
    Our limit is 30 times, so we are not paying more
    2008 2009 2010 2011 2012 2013 2014
    161054 177159 194875 214363 235799 259379 285317
    92100 92100 92100 92100 92100 92100 92100
    68954 85059 102775 122263 143699 167279 193217
    41372 51036 61665 73358 86219 100367 115930
    92100 92100 92100 92100 92100 92100 92100
    -2100 -2100 -2100 -2100 -2100 -2100 -2100
    -3480 -3828 -4211 -4632 -5095 -5605 -6165
    127892 137207 147454 158726 171124 184763 199765
    0.442 0.399 0.360 0.325 0.294 0.265 0.239
    56467 54704 53088 51604 50239 48983 47824
    rence between EV from previous question is because of terminal values being different
    2015 2016
    313849 323266
    92100 2100
    221749 321166 Cash flow adjustment for 2004
    133049 192699 D&A 91680
    92100 2100 "-Delta Capex -2100
    -2100 -2100 "-Delta NWC -2377
    -6782 -7460 Cash flow adjustment 87203
    2609536 185239
    0.216 Delta capex is 2100 for the next 15 years
    564133 In this case, we have a constraint on delta capex (21L every year for next 15
    Thus, cash flow adjustment is dependent only in growth of the NWC

    EBTDA of 2015 313850

    TV 2393269

    We are using 2016 numbers for TV computation as assumptions (D&A) ar


    Cash flow would change and hence TV has to be computed fr
    a capex (21L every year for next 15 years) and D&A(2100 every year)
    only in growth of the NWC

    mputation as assumptions (D&A) are being changed from 2016.


    nd hence TV has to be computed from 2016 values.

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