• Author / Uploaded
• Faith Allen

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Incremental Expected Sales and Cash Flows from Home Video Delivery Project ($1,000s) Year 2001 2002 2003 2004

2005

2006

Revenues EBITD 15% of sales Depreciation EBIT Tax Expense EBIAT CAPX(a) Investment in NWC

5,600 840 -275 565 -226 339 300 0

7,500 1125 -300 825 -330 495 300 0

1200 180 -200 -20 8 -12 300 0

2400 360 -225 135 -54 81 300 0

3,900 585 -250 335 -134 201 300 0

a--capital expenditures of $300,000 are expected to continue in perpetuity, and are in addition to the $1.5 million initial investment.

n to the $1.5 million

Rf Rd Market risk premium Marginal Tax Rate Debt Beta Asset Beta for Kramer.com and Cityretrieve.com Initial Investment (2001)

5% 6.80% 7.20% 40% 1.5 1.5 million

Incremental Expected Sales and Cash Flows from Home Video Delivery Project ($1,000s) 1 2 Year 2001 2002 2003 Revenues EBITD Depreciation EBIT Tax Expense EBIAT CAPX(a) Investment in NWC Add back depreciation Free Cash Flow Terminal Value Total Cash Flow PV at WACC Enterprise Value Less Initial Investment NPV Assumed Amount of Debt

15% of sales

1200 180 -200 -20 8 -12 300 0

2400 360 -225 135 -54 81 300 0

3 2004

4 2005

5 2006

3,900 585 -250 335 -134 201 300 0

5,600 840 -275 565 -226 339 300 0

7,500 1125 -300 825 -330 495 300 0

Rf Rd Market risk premium Marginal Tax Rate Debt Beta Asset Beta for Kramer.com and Cityretrieve.com Initial Investment (2001) ($ 1,000s)

5.00% 6.80% 7.20% 40.00% 1.500 1500.000

Incremental Expected Sales and Cash Flows from Home Video Delivery Project ($1,000s) 1 Year 2001 2002 Revenues EBITD Depreciation EBIT Tax Expense EBIAT CAPX(a) Investment in NWC Add back depreciation Free Cash Flow Terminal Value Total Cash Flow PV at WACC Enterprise Value Less Initial Investment NPV Assumed Amount of Debt Amount of debt Interest Payment Tax Shield on Interest Interest Coverage PV of interest tax shields APV=All Equity NPV + PV Tax Shields

15% of sales

1200 180 -200 -20 8 -12 300 0

2 2003

3 2004

4 2005

5 2006

2400 360 -225 135 -54 81 300 0

3,900 585 -250 335 -134 201 300 0

5,600 840 -275 565 -226 339 300 0

7,500 1125 -300 825 -330 495 300 0

Rf Rd Market risk premium Marginal Tax Rate Debt Beta Asset Beta for Kramer.com and Cityretrieve.com Initial Investment (2001) ($ 1,000s)

5.00% 6.80% 7.20% 40.00% 1.500 1500.000

Incremental Expected Sales and Cash Flows from Home Video Delivery Project ($1,000s) 1 Year 2001 2002 Revenues EBITD Depreciation EBIT Tax Expense EBIAT CAPX(a) Investment in NWC Add back depreciation Free Cash Flow Terminal Value Total Cash Flow PV at WACC Enterprise Value Less Initial Investment NPV Assumed Amount of Debt PV of remaining cash flows

15% of sales

1200 180 -200 -20 8 -12 300 0

2 2003

3 2004

4 2005

5 2006

2400 360 -225 135 -54 81 300 0

3,900 585 -250 335 -134 201 300 0

5,600 840 -275 565 -226 339 300 0

7,500 1125 -300 825 -330 495 300 0

Rf Rd Market risk premium Marginal Tax Rate Debt Beta Asset Beta for Kramer.com and Cityretrieve.com Initial Investment (2001) ($ 1,000s)

5.00% 6.80% 7.20% 40.00% 1.500 1500.000