1. Capital Budgeting revisited…
“Keep getting up when you hit the ground !”
(inspired by Liz)
Evaluating Cash Flows
Week 2 Joint MBA - Finance 5880
Webster-SHUFE-2017
Dr. Paulus Bon EMBA

2. The Business Project Teams
Facebook

3. Afternoon…
Estee Lauder

4. Summarize companies & Ticker symbols
Monster Beverage (MNST)
Boeing (B)
Starbucks (SBUX)
Coach (COH)
Marriott (MAR)
Facebook (FB)
Ford (F)
Amazon (AMZN)
Alibaba Group (BABA)
Rockwell Automation (ROK)
Microsoft (MSFT)
Estee Lauder (EL)
NOTE: Teams of 4 or 3 members get higher scores c.p. for the same work as with 5 people one can do substantially more than with 4 or 3…..

5. And the winner is? (5 years)

6. And over the last year?

7. Get a fast update on your company Webster Library!

9. Distributed a Reader

10. Investor relations (10K, 10Q)

11. Intrinsic Valuation AAPL
Download 10K/10Q

12. Financial Balance sheet…

13. Find the Free cash Flow 2016
NOPAT+ DEP+ change non cash WC- CAPEX= FCF
60*(1-25%) = 43 B USD
Assume 10% short term growth
Assume 4 % long term growth
WHY?
ST: analyze quarterly cash flows
LT: AAPL at the beginning of life cycle+ Fin balance sheet…(show your output) A=322 L=193 MKT E=820 so Asset GAP 691 B USD or more than 2 times assets on the ground… (thus 4% LT)

14. Valuation
43 B USD (last year 2016) growing 10% 5 years after that a perpetuity growing 4%
WACC%= 8.1% (search Damodaran)

15. What if you start with MV?
At MV E=820 and MV D=80 the share price (market) is $158 A firm value of 900 B USD Corresponds with a LT growth rate of: 3.2% This is what the market has implicitly assumed in the current stock price….

16. Intrinsic Value at different growth rates… assumed growth: 0% -4%
Share price in $
Intrinsic Value in B $
1% % % %

17. What happens if 10K or 10Q are not according to GAAP or the release is delayed…

18. Retail versus e-commerce

19. US car market & Ford…

20. Making Milk Exciting…

21. Walt Disney turbulence…

22. Tech is on fire…

23. Assignment week 2: BoD Investment Proposal: The Brasilia Theme Park 2017
DUE WEEK 4 SO BE READY TO PRESENT