Discussion Post
Choose one of the below topics, and post your initial response on that topic.
• In the case study, when calculating incremental unlevered net income, should we include all the expenses mentioned in the case? If not, what expenses should we exclude and why?
• Is there a big jump of unlevered net income from Year 5 to Year 6? Why?
• How do you calculate the level of net working capital (NWC)? What is the value of NWC at the end of Year 0, 1, and 6?
• Which of the following free cash flow (FCF) streams is (are) a growing perpetuity?
FCF in Year 5, 6, 7 ...
FCF in Year 6, 7, 8 ...
FCF in Year 7, 8, 9 ...
If you use the growing perpetuity formula: Year N TV = (Year N+1 CF)/(r-g), what is the present value of that terminal value (is it Year N TV or some other numbers)?