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Valuation Using Forecasts of Cash Flows : An Illustration of Microsoft

Valuation Using Forecasts of Cash Flows : An Illustration of Microsoft. Di (Wendy) Wang. The Relation Between FCF and Accounting #. FCF = EPAT- NEA. Basis of the forecast in this module. Parsimonious Assumptions.

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Valuation Using Forecasts of Cash Flows : An Illustration of Microsoft

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  1. Valuation Using Forecasts of Cash Flows: An Illustration of Microsoft Di (Wendy) Wang

  2. The Relation Between FCF and Accounting # FCF = EPAT- NEA Basis of the forecast in this module

  3. Parsimonious Assumptions Based on an analysis of Microsoft’s financial statements in Module 4, we arrived at the following assumptions for the foreseeable future:

  4. Microsoft Multiyear Forecasts of Sales, EPAT and NEA

  5. Valuing Microsoft Forecasts of FCF for 2014 through 2018:

  6. Valuing Microsoft Estimated growth rate beyond 2018: 3.6% Estimate of enterprise cost of capital: 10%

  7. Discounted Cash Flow Model

  8. Continuing Values

  9. Sources: • Microsoft Form10-K For the Fiscal Year Ended June 30, 2011 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8062497 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2012 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8733512 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2013 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=9422625

  10. THANK YOU!

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