Question

You are trying to value Apple’s stock as of the end of their fiscal year 2017. You’ve calculated their unlevered free cash flows from 2015 to 2017 as $44,932, $65,051, and $43,942. You’ve forecast their future unlevered FCFs for the next five years as $45,303, $58,936, $64,865, $71,391, and $78,574. You believe that the FCF in the first year after your forecast horizon will be $82,503, and the FCFs will grow at a constant rate of 5% forever. You’ve calculated the firm’s WACC (discount rate) as 15%. The company currently has $100,000 in capital structure debt, $250,000 in total liabilities, $25,000 in cash, $100,000 in current assets, no minority interest, and 3,000 shares outstanding. What is Apple’s implied stock price per share, based on this information? Show your work (you can do this in Excel if you’d like, just include all of your work). Upload your answers to the assignment turn-in on the course website before class on Friday, April 20^th.

Answer 1

Year	FCF	Horizon Value	Total	DF	PV
1	$ 45,303.00		45303	0.869565	$      39,393.91
2	$ 58,936.00		58936	0.756144	$      44,564.08
3	$ 64,865.00		64865	0.657516	$      42,649.79
4	$ 71,391.00		71391	0.571753	$      40,818.04
5	$ 78,574.00	825030	903604	0.497177	$ 449,250.89
6	$ 82,503.00
				Total	$ 616,676.71
				Debt	$ 100,000.00
				Liabilites	$ 250,000.00
				Equity Value	$ 266,676.71
				Per share	$              88.89