jhughes825
New Member
- Joined
- Apr 3, 2009
- Messages
- 3
I am trying to do a return on equity analysis - could I get some help from someone please? I am a new analyst at a small boutique.
The initial investment is $6,000,000.
The free cash flows are as follows:
2016 = 600,000
2017 = 600,000
2018 = 600,000
2019 = 600,000
2020 = 600,000
2021 = 600,000
2022 = 600,000
2023 = 52,315,912
2024 = 64,588,052
The discount rate is 10%
The terminal value assigned to this project is 6x free cash flow.
The reason why the final two years of the projection period are so much higher is that in 2023, the debt is paid off and all free cash can flow down for equity. (ie no debt service burden)
I know I should do an IRR calculation with -6,000,000 as initial cash flow, but confused about how to integrate the terminal value (6x FCF) and the discount rate of 10%.
Could someone give me some guidance asap in doing this calculation in excel? Thank you so much.
The initial investment is $6,000,000.
The free cash flows are as follows:
2016 = 600,000
2017 = 600,000
2018 = 600,000
2019 = 600,000
2020 = 600,000
2021 = 600,000
2022 = 600,000
2023 = 52,315,912
2024 = 64,588,052
The discount rate is 10%
The terminal value assigned to this project is 6x free cash flow.
The reason why the final two years of the projection period are so much higher is that in 2023, the debt is paid off and all free cash can flow down for equity. (ie no debt service burden)
I know I should do an IRR calculation with -6,000,000 as initial cash flow, but confused about how to integrate the terminal value (6x FCF) and the discount rate of 10%.
Could someone give me some guidance asap in doing this calculation in excel? Thank you so much.