Assignment Requirements
I will upload a document called PEP Valuation Rubric, which will include the criteria used to value the company PEP ( Pepsico, Inc. (PEP) -NYSE), I will also upload a excel document that will include an spread sheet that needs to be filled with the PEP numbers, Also use the forecasting assumptions used in the excel for PEP
Also , I will upload powerpoint slides that can be beneficial regarding this course work
FIN449
Valuation #2 Rubric
In this project, the whole valuation process should be part of a comprehensive whole. In this project, specific line items being forecasted will be adjusted to get a more accurate valuation using FCFF & FCFE
Valuation #3 will be graded on the following criteria:
– Process (e.g. documented assumptions, robust analysis, follows accepted steps, etc.)
– Legitimacy (e.g. inputs & outputs make economic sense, follow reasonable patterns, are due to identifiable causal relationships, etc.)
– Technique (e.g. correct computations are chosen, computations are made properly)
– Thoroughness (e.g. Double check results vs other methods)
Please email me a copy of your workbook so I can help understand any issues I see in your work. Format your work similarly to the strawman exercise and title the file in this way: PEP.your.name.xls
Make sure your FCFF & FCFE are computed for all years, historic and forecast. Your valuation should be based on forecast years 2014-2018.
Your work should have all the elements of the previous assignments, as well as:
- Sales growth by segment and overall, attributing % growth to Volume and to “Pricing, etc.” as well as the resulting % revenue growth.
- COGS for overall company
- SG&A for overall company
- Cash for the whole company
- A/R for the whole company
- Inventories for the whole company
- PP&E for the whole company
- A/P for the whole company
- Include Degree of Operating Leverage in your useful ratios (use GP/OpInc to estimate DOL)
- Computation FCFF & FCFE without adjustments then…
o Adjust for effect of inventory method (if appropriate)
o Adjust for operating leases
o Adjust for R&D (if appropriate)
- Determine your best estimate of the Cost of Equity, including beta regression & bottom-up methods
- Determine the Cost of Debt to be used in WACC
- Computation of equity value by discounting adjusted FCFE with Ke AND
computation of the enterprise value (EV) by discounting adjusted FCFF with WACC - Compute the market value of debt
- Estimate the equity value by subtracting the MV of debt from the enterprise value
- A comparison of the target firm to comparable firms, including the useful ratios and the P/E, P/S and EV/EBITDA for each. In addition, show the relative valuation of the target firm from the P/E and P/S of an index of the comparable companies.
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