The Discounted Free Cash Flow Model for Total Equity Initial capital investment = $5,000,000 and NWC Investment = $500,000 Barking Dog Corporation Years Ending December 31 First Year |------------------------------------------------------------------------------------ Forecast ----------------------------------------------------------------------------------| 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total revenue $14,500,000 Cost of Goods Sold 7,250,000 Gross profit 7,250,000 Selling, general and administrative expenses 2,900,000 Earnings before interest, taxes, depr. & amort. (EBITDA) 4,350,000 Depreciation and amortization (MACRS) 1,000,000 Earnings before Interest and taxes (EBIT) 3,350,000 Federal and State Income Taxes 1,172,500 Net Operating Profit After-Tax (NOPAT) 2,177,500 Equipment Salvage Value in 2024, column K Equipment Salvage Value 1,000,000 Capital Gain/Loss in column K Capital Gain/Loss Federal Capital Gain/Loss Tax Rate 20% in column K Federal Capital Gain/Loss Tax Rate 20% Terminal value, 2024 in column K Add back Net Working Capital Terminal value, 2024 Present Value of Free Cash Flows (K Expenditures informational) (5,000,000) Initital Increase in Net Working Capital (informational) (500,000) Add back depreciation and amortization 1,000,000 Subtract sum of Capital Expenditures AND (5,000,000) New Net Working Capital (500,000) Free Cash Flow 2015 (See Ch 3-15 on PowerPoint) ($2,322,500) PV of Discounted Free Cash Flow Cumulative Discounted Free Cash Flow NPV IRR MIRR @ Reinvestment Rate of 10% Discounted FCF Payback