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Valuation Using Forecasts of Cash Flows : An Illustration of Microsoft

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## Valuation Using Forecasts of Cash Flows : An Illustration of Microsoft

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**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**Based on an analysis of Microsoft’s financial statements in Module 4, we arrived at the following assumptions for the foreseeable future:**Valuing Microsoft**Forecasts of FCF for 2014 through 2018:**Valuing Microsoft**Estimated growth rate beyond 2018: 3.6% Estimate of enterprise cost of capital: 10%**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