Business Valuation
Student2014
421792_-_business_valuationn_ii.docBusiness Valuation II | 3
Running Head: Business Valuation II
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Two-Stage DCF Valuation of Apple as of March 1, 2013
When conducting two-stage DCF valuation, we take into consideration the growth rates of the extraordinary growth phase and the consistent-growth phase. The H model allows for the use of both growth rates in evaluation of either the firm’s value of the equity being valued. The H model can be used to calculate a firm’s intrinsic value using the following formula:
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Apple indicated increasing growth from 2001-2012. Using the H model, we assume that the extraordinary phase lasts for 2H time.
Thus, t = 2H =12 years
H =
years
6
2
12
=
,We assume that the stable growth began after the 6th year onwards. Using the H model to calculate the intrinsic value of Apple for 2013:
|
|
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
Average2005-2012 |
|
Operating income |
6,813 |
8,038 |
12,316 |
20,598 |
20,049 |
20,956 |
17,018 |
19,411 |
|
|
Cash, cash equivalents & marketable shares |
8,261 |
10,110 |
15,386 |
24,490 |
23,464 |
25,620 |
25,952 |
29,129 |
|
|
Total assets |
11,516 |
17,205 |
25,347 |
39,572 |
47,501 |
75,183 |
116,371 |
176,064 |
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Non-cash ROE |
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The value of Apple in 2013,
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_1430313236.unknown
Sheet1
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | Average 2005-2012 | ||
| Net sales | 5,363 | 5,742 | 6,207 | 8,279 | 13,931 | 19,315 | 24,006 | 37,491 | 42,905 | 65,225 | 108,249 | 156,508 | ||
| Cost of sales | 4,128 | 4,139 | 4,499 | 6,020 | 9,889 | 13,717 | 15,852 | 24,294 | 25,683 | 39,541 | 64,431 | 87,846 | ||
| Research and development | 441 | 447 | 471 | 489 | 535 | 712 | 782 | 1,109 | 1,333 | 1,782 | 2,429 | 3,381 | ||
| Selling, general and administrative | 1,138 | 1,139 | 1,238 | 1,444 | 1,864 | 2,433 | 2,963 | 3,761 | 4,149 | 5,517 | 7,599 | 10,040 | ||
| Total operating expenses | 1,579 | 1,586 | 1,709 | 1,933 | 2,399 | 3,145 | 3,745 | 4,870 | 5,482 | 7,299 | 10,028 | 13,421 | ||
| Operating income | -344 | 17 | -1 | 326 | 1,643 | 2,453 | 4,409 | 8,327 | 11,740 | 18,385 | 33,790 | 55,241 | ||
| Net income | -25 | 65 | 69 | 276 | 1,328 | 1,989 | 3,496 | 6,119 | 8,235 | 14,013 | 25,922 | 41,733 |
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