cf term paper vishal

7/30/2019 CF Term Paper Vishal

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Financial Modeling and Discounted

of

SIA Pallogs

(a privately held Latvian woode

by

Vishal Verma

April 2013


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Cashflow Valuation

pallet producer)


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Outline

About SIA Pallogs

SIA Pallogs is a private wood production company established in 20

wooden pallets (pallogs). The company currently employs 152 peo

in Koknese and the other in Kraslava.

Position in the EU market

90% of the Pallogs revenues are generated through export while t

local market. Revenues have increased significantly over the recent

Revenues are expected to reach 5.2 mLVL mark in 2012.

The main export markets for Pallogs are Netherlands, Germany, Bel

the company owns 30% of the overall market of pallets. In France t

while in Denmark they are placed 5th. In Germany, they are ranked

Future developments

Due to the development of new market tendencies and rising prod

exploring ways to trim costs and increase market share. Due to the

produces in Europe, Alpha realizes the unsustainability of dominan

in mind, Alpha is planning to invest in new trucks and trailers amou

its long term transportation services provider. This way the compa

companies and ensure timely deliveries to its clients in the EU. In a

the new assets, the transportation partner will help secure EU-to-L

accomplish its goals Alpha is planning to increase its credit line by


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- Mod-Normal, Mod-cash sweep, Mod-cs,div: The 3 models. More i

- Dep Loan: Shows caluclation pertaining to depreciation of fixed asfor various loans. Used primarily in the Mod-normal model.

- AX-Repay Sched-old loans, AX-Repay Sched-new loans, AX-Repay

schedules

- AX-Total-EU: Shows the total betas for various industries in EU.


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01. Its core business is production of

ple. It has two production sites - first located

e remaining 10% come from sales in the

years 26% increase in 2010-2011 period.

lgium, France and Denmark. In Netherlands,

hey occupy the 3rd spot for pallets import

number 8.

uction costs, SIA Alpha is inclined on

presence of large number of wooden pallet

ce gained on price alone. Keeping this view

nting to 650,000 EUR in co-operation with

y plans to limit its dependence on logistic

dition, to increase the capacity utilization of

tvia cargo agreements for Alpha. To

100 000 LVL to cover its working capital


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formation on the next sheet.

sets and interest and principal calculation

ched-new loans2: Bank loan repayment


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A note on the 3 mod

All the 3 models described below are completely dynamic which me

the dashboard and the model would respond without the need for

to the valuation.

The main dashboard is located in the worksheet 'Dashboard'. Howe

features, specific dashboards have been placed in the sheets contai

Mod-normal

This model tries to model the company policy decisions as much as

policy where the company plans to disburse LVL 400,000 dividends i

loan prohibits them from paying dividends for another 4-5 years, noremaining years.

The company has recently invested in physical assets and considers

expenditures in another 4-5 years. For this reason, no addition to fix

projections.

The loan and the interest payments follow the schedule laid out by

forma statements.

Mod-cash sweep


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Care has been take to ensure cash sweep takes precedence over div

would take place before any dividending takes place.

Again, fixed assets have been varied in proportion with sales makin

reality.

One major change in this model has been the way balance sheets h

models where B/S have been balanced using CF statements, in this

alone. This change was necessitated by the need to avoid circular re

been drawn up for reconciliation and are later used for valuation pu

Explanations on default drivers us

Trends for all the drivers below are shown in the 'Historicals, Trends

Sales Growth Rate: Decision was based on recent growth rates, lon

growth rate average.

COGS/Sales: This ratio has largely stayed in the 60% range. Years 20

to decline in sales and rise of manufacturing costs.

Inventory Turnover: Again the decision was based on recent turnov

can be attributed to rise in manufacturing costs.

DSO: This number has stayed in the vicinity of 30 for most years, th

the economic recession of 2007-08 when most businesses were aff

Prepayment/COGS: Decision was made considering strong liquidityof the ratio in the past years.

DPO: This number has stayed in the region of 15-20 for the last cou


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same eve .


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els

ans one only needs to change the inputs on

ny other change elsewhere, all the way up

ver, for cash sweep and dividending

ning the respective models.

possible. This is evident in the dividending

in 2013. However, since their new long term

dividending has been shown in any of the

unlikely making serious capital

ed assets has been shown in the

he bank and they are refelcted in the pro-


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idending. Therefore always cash sweep

the projections appear more in line with

ve been balanced. Unlike in the last two

ase the B/S have been balanced using B/S

ferences. However, CF statements have

rpose.

d in 'Dashboard'

' sheet.

term industry average and company

08 and 2009 saw a 20% hike in the ratio due

r figures. The rise of the ratio in 2007-08

ugh th number did take an upswing during

cted with liquidity problems.

tate of the company and seeing the trend

le of years. However, during 2007-08, this


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ManufacturingDirect Material

Factory Overhead

Utilities

Supply freight

Other manufacturing costs

Non-manufacturing

Selling (Transportation)

Manufacturing

Direct Labor

Factory OverheadDepreciation

Wages/Salaries

Company car-fuel, maintainanence

Social Tax

Claim against goods

Utilities

Depreciation-leased FA

Current asset write-off

Other manufacturing costs

Variable

Cost

Total Variable Cost


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2012 2011 2012 2011

Sales 5,268,671.29 5,044,019.771,640,878.73 1,840,234.76 Variable SGA 736,047.76 748,410.96

Var SGA/Sales 13.97% 14.84%

256,640.10 212,256.60

146,691.64 169,406.47 Fixed SGA 434,615.19 394,041.80

351,237.41 324,667.36 %chg fxd SGA 10.30%

736,047.76 748,410.96

3,131,495.64 3,294,976.15

144,627.20 133,686.60

307,935.00 233,651.53

216,940.70 200,529.90

146,691.64 169,406.47

124,101.75 114,762.92

68,494.91 19,075.93

28,515.56 26,519.47

7,968.05 49,524.44

- 8,115.08

165,288.00 152,784.64


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2006 2007 2008

Income Statements 2006-12

Net Sales 2,366,618.00 2,688,329.00 1,874,481.00

Cost of Goods Sold 1,745,764.00 2,358,740.00 1,621,036.00

Selling Expenses 338,624.00 267,811.00 191,572.00

Administrative Expenses 27,873.00 52,840.00 48,176.00

Other income/expenses

Other Income 16,525.00 35,365.00 25,709.00

Interest Income 2,220.00 23.00 29.00

Other Expenses 35,458.00 26,648.00 17,939.00

Extraordinary Expenses 14,446.00 - -

Interest Expense 1,523.00 11,305.00 25,846.00

Deferred Tax 4,655.00 16,445.00 24,500.00

Income Tax 27,021.00 - -

14% 0% 0%

Net Income 189,999.00 (10,072.00) (28,850.00)

Balance Sheets/EoY/2006-12

Total Non-current Assets 266,829.00 603,815.00 734,454.00

Technological Assets - - 226,648.00

Other Fixed assets 224,639.00 496,428.00 395,896.00

Long-term Financial Investments 41,190.00 106,387.00 110,910.00

Long-term Loans to Owners 1,000.00 1,000.00 1,000.00

Total Current Assets 343,877.00 314,131.00 229,193.00

Inventories 67,286.31 63,270.90 62,651.00

P t f d 69 028 69 44 357 10 11 471 00


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Other Current Liabilities 67,914.00 62,736.00 40,522.00

Short-term Debt 19,537.00 53,443.00 100,450.00

Liabilities+Equity 610,706.00 917,946.00 914,647.00- - 49,000.00

Sales Growth Rate

Sales 2,366,618.00 2,688,329.00 1,874,481.00

Sales growth rate YoY 13.59% -30.27%

Geometric average growth rate 14%

Long term industry average 6.15%

COGS/Sales ratio

COGS/Sales 74% 88% 86%

Average 73%

Inventory Turnover

Average inventory 65,278.61 62,960.95

Turnover = COGS/Avg. Inventory 36 26

Average 21

Days Sales Outstanding

DSO 28 28 27

Average 37

Prepayment/COGS ratio

Prepayment/COGS 3.95% 1.88% 0.71%

Average 2.62%

Days Payables Outstanding

DPO 39 41 40


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2009 2010 2011 2012

1,764,832.00 3,982,959.00 5,044,020.00 5,268,671.00

1,134,913.00 2,484,627.00 3,452,244.00 3,433,420.00

377,378.00 832,084.00 935,514.00 920,060.00

23,460.00 21,709.00 29,588.00 48,936.00

77,834.00 47,551.00 118,503.00 36,856.00

26.00 1,440.00 18,082.00 7,335.00

15,120.00 16,688.00 32,951.00 46,024.00

- - - -

12,370.00 6,866.00 10,146.00 5,035.00

- 18,032.00 3,331.00 25,561.00

15,551.00 105,583.00 101,162.00 96,893.00

6% 19% 16% 13%

263,900.00 546,361.00 615,669.00 736,933.00

596,149.00 584,217.00 619,645.00 1,366,275.00

185,439.00 135,989.00 86,538.00 37,088.00

323,292.00 254,256.00 455,597.00 1,026,311.00

86,418.00 193,972.00 21,510.00 246,876.00

1,000.00 - 56,000.00 56,000.00

391,295.29 723,076.00 1,066,354.00 1,244,228.00

69,969.95 137,211.17 489,188.00 166,925.00

13 392 34 23 737 83 89 755 00 242 918 00


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219,972.00 144,595.00 144,127.00 153,242.00

111,121.00 116,967.00 78,587.00 84,900.00

987,443.00 1,307,293.00 1,685,999.00 2,610,503.001.29 - - -

1,764,832.00 3,982,959.00 5,044,020.00 5,268,671.00

-5.85% 125.68% 26.64% 4.45%

64% 62% 68% 65%

66,310.48 103,590.56 313,199.59 328,056.50

17 24 11 10

55 50 32 39

1.18% 0.96% 2.60% 7.08%

52 23 19 16


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Pick mode > PESSIMISTIC

Drivers Optimistic Base

Sales Growth Rate 5.0% 3.0%

COGS/Sales 62.0% 65.0%

Inventory Turnover 15 12

DSO 32 37

Prepayment/COGS 4.0% 2.5%

DPO 18 27

Min. Cash/Sales 2.0% 1.5%

Operating Cash/Cash 50.0% 60.0%

Net FA/Sales 20.0% 15.0%

Default


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OPTIMISTIC

BASEPESSIMISTIC


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Pessimistic Override Final

2.0% 3.5% 3.5%

70.0% 70.0%

8 8

42 42

1.0% 1.0%

40 40

1.0% 1.0%

70.0% 70.0%

12.0% 12.0%

You can override the defaults using this column


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2012 2013 2014

Total Sales 5,268,671.00 5,711,074.49 5,901,932.09

Sales (existing capacity) 5,453,074.49 5,643,932.09

Additional sales 258,000.00 258,000.00

Cost of Goods Sold 3,997,752.14 4,131,352.46

SGA Expense 1,334,737.67 1,411,173.96

Variable 856,661.17 885,289.81

Fixed 434,615.00 478,076.50 525,884.15

EBIT 378,584.67 359,405.66

Other income/expenses 28,092.92 28,249.67

Other Income - -

Interest Income 92.92 249.67

Other Expenses 28,000.00 28,000.00

Interest Expense 13,203.42 13,625.43

EBT 337,288.33 317,530.57

Deffered tax 46,924.00 50,000.00

Income Tax 50,593.25 47,629.59

Net Income 239,771.08 219,900.98

Projected Income Statement


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Operating cash 36,880.70 39,977.52 41,313.52

Excess cash 232,305.30 624,164.93 1,038,923.44

Total Assets 2,887,426.12 3,020,742.78

Total Equity 1,768,710.08 1,988,611.06

Share capital and PIC 2,000.00 2,000.00 2,000.00

Reserves 3,976.00 3,976.00 3,976.00

Retained Earnings EB 1,898,963.00 1,738,734.08 1,958,635.06

Retained Earnings BB 1,898,963.00 1,738,734.08

Change in Retained Earnings (160,228.92) 219,900.98

Provisions 23,195.00 24,000.00 24,000.00

Total Long-term Liabilities 289,815.00 516,425.98 412,245.75

Long-term Debt 242,891.00 466,425.98 362,245.75

Deferred Tax Provision 46,924.00 50,000.00 50,000.00

Total Short-term Liabilities 392,554.00 602,290.06 619,885.97

Current Part of Loan 88,132.00 104,180.24 107,135.01

Other:Taxes, Soc. Sec.,Wages 65,110.00 60,000.00 60,000.00

Accounts Payable 154,412.00 438,109.82 452,750.96

Revolver 84,900.00 - -

Liabilities+Equity 2,887,426.12 3,020,742.78

Balance Check OK OK

Net Income 239,771.08 219,900.98

Cash Flow Statements


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CFF (159,611.78) (101,225.46)

Total CF 476,759.62 414,758.51

BB Excess cash (revolver) 147,405.30 624,164.93

EB Excess cash (revolver) 624,164.93 1,038,923.44

Cost of Equity

Risk Free Rate LV 1.20%

Total Forestry/Paper Industry Risk

(assuming Industry avg. capital

structure) = total 3.18

Equity Risk Premium LV 8.80%

Cost of Equity 29.18%

Long term growth rate 3.00%

FCFE and Value of Equity

CFO - Dep 296,518.81 193,208.37

Less: [Capex - Dep] (339,852.60) (322,775.60)

Valuation


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Total FCFF 1,049,574.83 529,609.40

Value of Firm 2,009,028.94


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Current Mode

PESSIMISTIC

2015 2016 2017

6,099,469.72 6,303,921.16 6,515,528.40

5,841,469.72 6,045,921.16 6,257,528.40 Sales Growth 3.50%

258,000.00 258,000.00 258,000.00 Additional Sales 258,000.00

4,269,628.80 4,412,744.81 4,560,869.88 COGS/Sales 70.00%

1,493,393.02 1,581,907.99 1,677,281.06

914,920.46 945,588.17 977,329.26 Variable SGA/Sales 15%

578,472.57 636,319.82 699,951.80 Fixed SGA growth 10.00%

336,447.89 309,268.35 277,377.46

28,415.57 28,547.97 28,632.23

- - -

415.57 547.97 632.23 Demand Deposit Rate 0.04%

28,000.00 28,000.00 28,000.00 Avg. other expense 28,000.00

10,670.66 7,632.07 4,507.31

297,361.66 273,088.31 244,237.92

50,000.00 50,000.00 50,000.00

44,604.25 40,963.25 36,635.69 Income tax rate 15.00%

202,757.42 182,125.06 157,602.23

Dont change any assumptions here. Use the

'Dashboard' sheet instead.

Assumptions/Data Used


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42,696.29 44,127.45 45,608.70 Op-Cash/Cash 70.00%

1,369,920.17 1,580,568.02 1,508,270.96

3,134,557.34 3,256,956.32 3,140,917.13

2,191,368.48 2,373,493.54 2,531,095.77

2,000.00 2,000.00 2,000.00

3,976.00 3,976.00 3,976.00

2,161,392.48 2,343,517.54 2,501,119.77

1,958,635.06 2,161,392.48 2,343,517.54

202,757.42 182,125.06 157,602.23

24,000.00 24,000.00 24,000.00

305,110.74 194,937.15 50,000.00

255,110.74 144,937.15 (0.00)

50,000.00 50,000.00 50,000.00

638,078.12 688,525.63 559,821.36

110,173.59 144,937.15 -

60,000.00 60,000.00 60,000.00

467,904.53 483,588.47 499,821.36 DPO 40

- - -

3,134,557.34 3,256,956.32 3,140,917.13

OK OK OK

202,757.42 182,125.06 157,602.23


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(104,096.43) (75,410.02) (289,874.31)

330,996.73 210,647.85 (72,297.06)

1,038,923.44 1,369,920.17 1,580,568.02

1,369,920.17 1,580,568.02 1,508,270.96

Cost of Capital

Bank Loan Rate 2.80%

Corp. Tax Rate 15.00%

Cost of Debt 2.38%

Debt (2013) 466,425.98

Equity (2013) 1,768,710.08

Debt/Capital 20.87%

WACC 23.59%

231,130.56 153,531.27 128,007.65

(203,962.60) (132,526.60) (89,569.60)


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445,763.82 293,689.94 1,300,658.82


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Default

Cash Sweep Switch %Ex. Cash for Swp 70.0%

%Ex. Cash Rem. 30.0%

2012 2013 2014

Total Sales 5,268,671.00 5,711,074.49 5,901,932.09




SGA Expense 1,334,737.67 1,411,173.96

Variable 856,661.17 885,289.81

Fixed 434,615.00 478,076.50 525,884.15

EBIT 378,584.67 359,405.66


Other Income - -


Other Expenses 28,000.00 28,000.00


Bank Loan Interest 6,800.95 10,456.47

Revolver Interest 1,893.27 -

EBT 341,797.53 320,502.83

YOnly cells shaded yellow should be altered!



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Prepayments of goods 242,918.00 39,977.52 41,313.52

Receivables 565,199.00 657,164.74 679,126.43

Total Cash 269,186.00 1,155,907.74 1,176,944.28

Operating cash 36,880.70 39,977.52 41,313.52

Excess cash 232,305.30 1,115,930.22 1,135,630.75

Total Assets 3,094,097.96 3,178,035.14

Total Equity 2,172,542.90 2,394,970.30


Reserves 3,976.00 3,976.00 3,976.00



Change in Retained Earnings 243,603.90 222,427.40

Provisions 23,195.00 24,000.00 24,000.00


Debt EB After Sweep 242,891.00 373,445.23 220,313.88

Cash sweep - (58,733.17) (59,770.04)

Debt EB Before Sweep 242,891.00 432,178.40 280,083.92

New (Amortization) 189,287.40 (93,361.31)



Current Part of Loan 88,132.00 - -

Other:Taxes, Soc. Sec.,Wages 65,110.00 60,000.00 60,000.00


Revolver 84,900.00 - -Liabilities+Equity 3,094,097.96 3,178,035.14

B l Ch k OK OK


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Change in Net PPE (=Capex-Dep) (624,946.06) 22,902.91

CFI + Dep 624,946.06 (22,902.91)

Change in Provisions 805.00 -

Change in Scheduled Debt 189,287.40 (93,361.31)

Change in Current Part of Loan (88,132.00) -

Dividends - -

CFF 101,960.40 (93,361.31)

Total CF 1,027,258.09 79,470.57

BB Excess Cash (Revolver) 147,405.30 1,115,930.22

Before Sweep: EB Excess Cash

(Revolver) 1,174,663.39 1,195,400.79

Cash Available for Sweep 58,733.17 59,770.04

Starting Debt Before Sweep 432,178.40 280,083.92

Sweep (58,733.17) (59,770.04)

After Sweep: EB Excess

Cash(Revolver) 147,405.30 1,115,930.22 1,135,630.75

Cost of Equity

Valuation


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CFO - Capex 925,297.69 172,831.88

Net Borrowing 130,554.23 (153,131.35)

Dividends - -

FCFE 1,055,851.92 19,700.53

TV

Total FCFE 1,055,851.92 19,700.53

Value of Equity 1,024,309.27

FCFF and Value of Firm

CFO - Capex 925,297.69 172,831.88

Interest Exp (1-tax rate) 7,390.09 8,888.00

Dividends - -

FCFF 932,687.77 181,719.87

TV

Total FCFF 932,687.77 181,719.87

Value of Firm 1,215,609.91


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Override Final Current Mode

5.0% 5.0% PESSIMISTIC

95.0%

2015 2016 2017

6,099,469.72 6,303,921.16 6,515,528.40

5,841,469.72 6,045,921.16 6,257,528.40 Sales Growth 3.50%


4,269,628.80 4,412,744.81 4,560,869.88 COGS/Sales 70.00%

1,493,393.02 1,581,907.99 1,677,281.06

914,920.46 945,588.17 977,329.26 Variable SGA/Sales 15%

578,472.57 636,319.82 699,951.80 Fixed SGA growth 10.00%

336,447.89 309,268.35 277,377.46

28,454.25 28,483.90 28,504.04

- - -



6,168.79 2,329.75 -

6,168.79 2,329.75 - Bank Loan Rate 2.80%

- - - Revolver Interest 2.23%

301,824.85 278,454.71 248,873.42





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42,696.29 44,127.45 45,608.70 Prepayment/COGS 1.00%

701,856.79 725,382.71 749,732.03 DSO 42

1,252,438.21 1,304,222.60 1,412,258.81 Min. Cash/Sales 1.00%

42,696.29 44,127.45 45,608.70 Op-Cash/Cash 70.00%

1,209,741.92 1,260,095.16 1,366,650.12

3,262,631.25 3,381,796.40 3,559,571.69

2,601,521.43 2,788,207.93 2,949,750.33

2,000.00 2,000.00 2,000.00

3,976.00 3,976.00 3,976.00

2,571,545.43 2,758,231.93 2,919,774.33

2,364,994.30 2,571,545.43 2,758,231.93

206,551.12 186,686.50 161,542.40

24,000.00 24,000.00 24,000.00

133,205.29 50,000.00 50,000.00

83,205.29 - -

(63,670.63) (41,602.65) -

146,875.92 41,602.65 -

(73,437.96) (41,602.65) -

50,000.00 50,000.00 50,000.00

527,904.53 543,588.47 559,821.36

- - -

60,000.00 60,000.00 60,000.00

467,904.53 483,588.47 499,821.36 DPO 40

- - -3,262,631.25 3,381,796.40 3,559,571.69

OK OK OK


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23,704.51 24,534.17 25,392.87

(23,704.51) (24,534.17) (25,392.87)

- - -

(73,437.96) (41,602.65) -

- - -

- - -

(73,437.96) (41,602.65) -

137,781.79 91,955.89 106,554.96

1,135,630.75 1,209,741.92 1,260,095.16

1,273,412.54 1,301,697.80 1,366,650.12

63,670.63 65,084.89 68,332.51

% Excess Cash Usable

for Sweep 5%

Sweeping Switch Y

146,875.92 41,602.65 -

(63,670.63) (41,602.65) -

1,209,741.92 1,260,095.16 1,366,650.12

Cost of Capital

Bank Loan Rate 2 80%


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211,219.75 133,558.53 106,554.96

(137,108.59) (83,205.29) -

- - -

74,111.17 50,353.24 106,554.96

406,946.83

74,111.17 50,353.24 513,501.79

211,219.75 133,558.53 106,554.96

5,243.47 1,980.29 - Income tax rate 15.00%

- - -

216,463.22 135,538.82 106,554.96

478,847.20

216,463.22 135,538.82 585,402.16


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Cash Sweep Switch Y%Ex. Cash for Swp

Dividending Switch N %Ex. Cash Rem.Dividended

Ex. Cash Bank

2012 2013 2014

Total Sales 5,268,671.00 5,711,074.49 5,901,932.09




SGA Expense 1,334,737.67 1,411,173.96Variable 856,661.17 885,289.81

Fixed 434,615.00 478,076.50 525,884.15

EBIT 378,584.67 359,405.66


Other Income - -


Other Expenses 28,000.00 28,000.00


Bank Loan Interest 6 800 95 10 456 47

Only cells shaded yellow should be altered!



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Total Current Assets 1,244,228.00 2,352,769.02 2,413,803.29

Inventories 166,925.00 499,719.02 516,419.06

Prepayments of goods 242,918.00 39,977.52 41,313.52

Receivables 565,199.00 657,164.74 679,126.43

Total Cash 269,186.00 1,155,907.74 1,176,944.28

Operating cash 36,880.70 39,977.52 41,313.52

Excess cash 232,305.30 1,115,930.22 1,135,630.75

Total Assets 3,094,097.96 3,178,035.14

Total Equity 2,172,542.90 2,394,970.30


Reserves 3,976.00 3,976.00 3,976.00



Change in Retained Earnings 243,603.90 222,427.40

Provisions 23,195.00 24,000.00 24,000.00


Debt EB After Sweep 242,891.00 373,445.23 220,313.88Cash sweep - (58,733.17) (59,770.04)

Debt EB Before Sweep 242,891.00 432,178.40 280,083.92

New (Amortization) 189,287.40 (93,361.31)



Current Part of Loan 88,132.00 - -Other:Taxes, Soc. Sec.,Wages 65,110.00 60,000.00 60,000.00


R l 84 900 00


51/87

Cash Avail. For Dividends - -

Dividends - -

After Sweep, Div: EB Excess Cash

(Revolver) 1,115,930.22 1,135,630.75

Reconciliation CF stmts.

Net Income 243,603.90 222,427.40

Change in AR 91,965.74 21,961.70

Change Inventories 332,794.02 16,700.04

Change in AP 283,697.82 14,641.13

Change in Deferred Tax Liab 3,076.00 -

Change in Prepayment for Goods (202,940.48) 1,336.00

Change in Other Current Liabs (5,110.00) -

Change in Loans to Owners - -

Change in Operating Cash 3,096.82 1,336.00

CFO - Dep 300,351.63 195,734.79

Change in Net PPE (=Capex-Dep) (624,946.06) 22,902.91

CFI + Dep 624,946.06 (22,902.91)

Change in Provisions 805.00 -

Change in Debt 130,554.23 (153,131.35)

Change in Current Part of Loan (88,132.00) -

Dividends - -

Cash Flow Statements


52/87

Risk Free Rate LV 1.20%

Total Forestry/Paper Industry Risk

(assuming Industry avg. capital

structure) = total 3.18

Equity Risk Premium LV 8.80%

Cost of Equity 29.18%

Long term growth rate 3.00%

FCFE and Value of Equity

CFO - Dep 300,351.63 195,734.79

Less: [Capex - Dep] (624,946.06) 22,902.91

CFO - Capex 925,297.69 172,831.88

Net Borrowing 130,554.23 (153,131.35)

Dividends - -

FCFE 1,055,851.92 19,700.53

TV

Total FCFE 1,055,851.92 19,700.53

Value of Equity 1,024,309.27

FCFF and Value of Firm

CFO - Capex 925,297.69 172,831.88

Interest Exp (1-tax rate) 7,390.09 8,888.00

Dividends - -

FCFF 932,687.77 181,719.87


53/87


54/87

Default Override Final Current Mode

70.0% 5.0% 5.0% PESSIMISTIC

30.0% 95.0%

30.0% 20.0% 0.0%

70.0% 100.0%

2015 2016 2017

6,099,469.72 6,303,921.16 6,515,528.40

5,841,469.72 6,045,921.16 6,257,528.40 Sales Growth 3.50%


4,269,628.80 4,412,744.81 4,560,869.88 COGS/Sales 70.00%

1,493,393.02 1,581,907.99 1,677,281.06914,920.46 945,588.17 977,329.26 Variable SGA/Sales 15%

578,472.57 636,319.82 699,951.80 Fixed SGA growth 10.00%

336,447.89 309,268.35 277,377.46

28,454.25 28,483.90 28,504.04

- - -



6,168.79 2,329.75 -

6 168 79 2 329 75 - Bank Loan Rate 2 80%





55/87

2,530,694.88 2,625,325.86 2,777,708.28

533,703.60 551,593.10 570,108.73 Inventory Turnover 8

42,696.29 44,127.45 45,608.70 Prepayment/COGS 1.00%

701,856.79 725,382.71 749,732.03 DSO 42

1,252,438.21 1,304,222.60 1,412,258.81 Min. Cash/Sales 1.00%

42,696.29 44,127.45 45,608.70 Op-Cash/Cash 70.00%

1,209,741.92 1,260,095.16 1,366,650.12

3,262,631.25 3,381,796.40 3,559,571.69

2,601,521.43 2,788,207.93 2,949,750.33

2,000.00 2,000.00 2,000.00

3,976.00 3,976.00 3,976.00

2,571,545.43 2,758,231.93 2,919,774.33

2,364,994.30 2,571,545.43 2,758,231.93

206,551.12 186,686.50 161,542.40

24,000.00 24,000.00 24,000.00

133,205.29 50,000.00 50,000.00

83,205.29 - -(63,670.63) (41,602.65) -

146,875.92 41,602.65 -

(73,437.96) (41,602.65) -

50,000.00 50,000.00 50,000.00

527,904.53 543,588.47 559,821.36

- - -60,000.00 60,000.00 60,000.00

467,904.53 483,588.47 499,821.36 DPO 40


56/87

- - -

% Remainder Excess

Cash Dividended 0.0%

- - - Dividending Switch N

1,209,741.92 1,260,095.16 1,366,650.12

206,551.12 186,686.50 161,542.40

22,730.36 23,525.92 24,349.33

17,284.54 17,889.50 18,515.63

15,153.57 15,683.95 16,232.88

- - -

1,382.76 1,431.16 1,481.25

- - -

(56,000.00) - -

1,382.76 1,431.16 1,481.25

234,924.27 158,092.71 131,947.83

23,704.51 24,534.17 25,392.87

(23,704.51) (24,534.17) (25,392.87)

- - -

(137,108.59) (83,205.29) -- - -

- - -


57/87

Debt (2013) 373,445.23

Equity (2013) 2,172,542.90

Debt/Capital 14.67%

WACC 25.25%

234,924.27 158,092.71 131,947.83

23,704.51 24,534.17 25,392.87

211,219.75 133,558.53 106,554.96

(137,108.59) (83,205.29) -

- - -

74,111.17 50,353.24 106,554.96

406,946.83

74,111.17 50,353.24 513,501.79

211,219.75 133,558.53 106,554.96

5,243.47 1,980.29 - Income tax rate 15.00%- - -

216,463.22 135,538.82 106,554.96


58/87


59/87

2013 2014 2015

Depreciation

Beggining balance Technological

assets 37088 24107 15670

New assets 0

Depreciation 12981 8437 5485

End balance 24107 15670 10185

Beggining balance FA 1026311 724127 434476

New assets 392003 0 0

TOTAL Assets 1418314 724127 434476Depreciation 694187 289651 173790

End balance 724127 434476 260686

Beggining balance LT FI 246876 222188.4 197500.8

Depreciation 24687.6 24687.6 24687.6

End balance 222188.4 197500.8 172813.2

TOTAL yearly depreciation 731855.6 322775.6 203962.6

Loan Repayment

Existing loans

BB 242891 196991 149790

Interest 2,8% 6706 4913 3574

Principal 45900 47201 48540EB 196991 149790 101250


60/87

2016 2017

10185 6620

3565 2317

6620 4303

260686 156412

0 0

260686 156412104274 62565

156412 93847 LT FI are made into new production site, depriciat

172813.2 148125.6 123438 98750.4 74062.8 49375.2

24687.6 24687.6 24687.6 24687.6 24687.6 24687.6

148125.6 123438 98750.4 74062.8 49375.2 24687.6

132526.6 89569.6

101250 51333

2198 782

49917 5133351333 0


61/87

ion calculated according to 10 year lease agreement

24687.6

24687.6

0


62/87

Maksjuma termi Neizmakstpauma vrtba

pauma

izpirkumamaksjums

Procentu

maksjums

Lgumaatldzba PVN 21%

30.11.2012 242,891.00 0.00 0.00 0.00 0.00

30.12.2012 242,891.00 3,776.13 1,057.93 0.00 0.00

30.01.2013 239,114.87 3,784.94 557.93 0.00 0.00

28.02.2013 235,329.92 3,793.78 549.10 0.00 0.00

30.03.2013 231,536.15 3,802.63 540.25 0.00 0.00

30.04.2013 227,733.52 3,811.50 531.38 0.00 0.00

30.05.2013 223,922.02 3,820.39 522.48 0.00 0.00

30.06.2013 220,101.62 3,829.31 513.57 0.00 0.00

30.07.2013 216,272.31 3,838.24 504.64 0.00 0.00

30.08.2013 212,434.07 3,847.20 495.68 0.00 0.00

30.09.2013 208,586.87 3,856.18 486.70 0.00 0.00

30.10.2013 204,730.69 3,865.17 477.70 0.00 0.00

30.11.2013 200,865.52 3,874.19 468.69 0.00 0.00

30.12.2013 196,991.32 3,883.23 459.65 0.00 0.00

30/01/2014 193,108.09 3,892.29 450.59 0.00 0.0030/01/2014 189,215.80 3,901.38 441.50 0.00 0.00

28.02.2014 185,314.42 3,910.48 432.40 0.00 0.00

30.03.2014 181,403.94 3,919.60 423.28 0.00 0.00

30.05.2014 177,484.34 3,928.75 414.13 0.00 0.00

30.06.2014 173,555.59 3,937.92 404.96 0.00 0.00

30.05.2014 169,617.67 3,947.10 395.77 0.00 0.00

30.06.2014 165,670.57 3,956.31 386.56 0.00 0.00

30.07.2014 161,714.25 3,965.55 377.33 0.00 0.00

30.08.2014 157,748.71 3,974.80 368.08 0.00 0.0030.09.2014 153,773.91 3,984.07 358.81 0.00 0.00

30.10.2014 149,789.83 3,993.37 349.51 0.00 0.00

30 11 2014 145 796 46 4 002 69 340 19 0 00 0 00


63/87

28/02/2017 63,943.10 4,193.68 149.20 0.00 0.00

30/03/2017 59,749.42 4,203.46 139.42 0.00 0.00

30/04/2017 55,545.95 4,213.27 129.61 0.00 0.00

30/05/2017 51,332.68 4,223.10 119.78 0.00 0.0030/06/2017 47,109.58 4,232.96 109.92 0.00 0.00

30/07/2017 42,876.62 4,242.83 100.05 0.00 0.00

30/08/2017 38,633.79 4,252.73 90.15 0.00 0.00

30/09/2017 34,381.05 4,262.66 80.22 0.00 0.00

30/10/2017 30,118.40 4,272.60 70.28 0.00 0.00

30/11/2017 25,845.79 4,282.57 60.31 0.00 0.00

30/12/2017 21,563.22 4,292.57 50.31 0.00 0.00

30/01/2018 17,270.65 4,302.58 40.30 0.00 0.00

28/02/2018 12,968.07 4,312.62 30.26 0.00 0.00

30/03/2018 8,655.45 4,322.68 20.20 0.00 0.00

30/04/2018 4,332.77 4,332.77 10.11 0.00 0.00


64/87

Maksjums kop

0.00

4,834.06

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.884,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.884,342.88

4,342.88

4 342 88


65/87

4,342.88

4,342.88

4,342.88

4,342.884,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88

4,342.88


66/87

Maksjumatermi

Neizmakstpauma

vrtba

paumaizpirkuma

maksjums

Procentu

maksjums

Lgumaatldzba

PVN 21%Maksjums kop

4/04/2013 297,332.00 0.00 0.00 0.00 0.00 0.0030/05/2013 297,332.00 4,622.51 1,295.05 0.00 0.00 5,917.55

30/06/2013 292,709.49 4,633.29 682.99 0.00 0.00 5,316.28

30/07/2013 288,076.20 4,644.10 672.18 0.00 0.00 5,316.28

30/08/2013 283,432.10 4,654.94 661.34 0.00 0.00 5,316.28

30/09/2013 278,777.16 4,665.80 650.48 0.00 0.00 5,316.28

30/10/2013 274,111.35 4,676.69 639.59 0.00 0.00 5,316.28

30/11/2013 269,434.66 4,687.60 628.68 0.00 0.00 5,316.28

30/12/2013 264,747.06 4,698.54 617.74 0.00 0.00 5,316.28

30/01/2014 260,048.53 4,709.50 606.78 0.00 0.00 5,316.28

28/02/2014 255,339.02 4,720.49 595.79 0.00 0.00 5,316.28

30/03/2014 250,618.53 4,731.51 584.78 0.00 0.00 5,316.28

30/04/2014 245,887.03 4,742.55 573.74 0.00 0.00 5,316.28

30/05/2014 241,144.48 4,753.61 562.67 0.00 0.00 5,316.28

30/06/2014 236,390.87 4,764.70 551.58 0.00 0.00 5,316.28

30/07/2014 231,626.17 4,775.82 540.46 0.00 0.00 5,316.28

30/08/2014 226,850.35 4,786.96 529.32 0.00 0.00 5,316.28

30/09/2014 222,063.38 4,798.13 518.15 0.00 0.00 5,316.2830/10/2014 217,265.25 4,809.33 506.95 0.00 0.00 5,316.28

30/11/2014 212,455.92 4,820.55 495.73 0.00 0.00 5,316.28

30/12/2014 207,635.37 4,831.80 484.48 0.00 0.00 5,316.28

30/01/2015 202,803.57 4,843.07 473.21 0.00 0.00 5,316.28

28/02/2015 197,960.49 4,854.37 461.91 0.00 0.00 5,316.28

30/03/2015 193,106.12 4,865.70 450.58 0.00 0.00 5,316.28

30/04/2015 188,240.42 4,877.05 439.23 0.00 0.00 5,316.28

30/05/2015 183,363.37 4,888.43 427.85 0.00 0.00 5,316.28

30/06/2015 178,474.93 4,899.84 416.44 0.00 0.00 5,316.2830/07/2015 173,575.09 4,911.27 405.01 0.00 0.00 5,316.28

30/08/2015 168,663.82 4,922.73 393.55 0.00 0.00 5,316.28

30/09/2015 163 741 08 4 934 22 382 06 0 00 0 00 5 316 28


67/87

30/05/2017 62,838.26 5,169.66 146.62 0.00 0.00 5,316.28

30/06/2017 57,668.60 5,181.72 134.56 0.00 0.00 5,316.28

30/07/2017 52,486.88 5,193.81 122.47 0.00 0.00 5,316.28

30/08/2017 47,293.07 5,205.93 110.35 0.00 0.00 5,316.2830/09/2017 42,087.14 5,218.08 98.20 0.00 0.00 5,316.28

30/10/2017 36,869.06 5,230.25 86.03 0.00 0.00 5,316.28

30/11/2017 31,638.81 5,242.46 73.82 0.00 0.00 5,316.28

30/12/2017 26,396.35 5,254.69 61.59 0.00 0.00 5,316.28

30/01/2018 21,141.66 5,266.95 49.33 0.00 0.00 5,316.28

28/02/2018 15,874.71 5,279.24 37.04 0.00 0.00 5,316.28

30/03/2018 10,595.47 5,291.56 24.72 0.00 0.00 5,316.28

30/04/2018 5,303.91 5,303.91 12.38 0.00 0.00 5,316.28


68/87

Maksjumatermi

Neizmakstpauma

vrtba

paumaizpirkuma

maksjums

Procentu

maksjums

Lgumaatldzba

PVN 21% Maksjums kop

Kopsumma: 297,332.00 22,246.18 3,685.93 774.05 324,038.164/04/2013 297,332.00 0.00 0.00 3,685.93 774.05 4,459.98

30/05/2013 297,332.00 4,622.51 1,295.05 0.00 0.00 5,917.55

30/06/2013 292,709.49 4,633.29 682.99 0.00 0.00 5,316.28

30/07/2013 288,076.20 4,644.10 672.18 0.00 0.00 5,316.28

30/08/2013 283,432.10 4,654.94 661.34 0.00 0.00 5,316.28

30/09/2013 278,777.16 4,665.80 650.48 0.00 0.00 5,316.28

30/10/2013 274,111.35 4,676.69 639.59 0.00 0.00 5,316.28

30/11/2013 269,434.66 4,687.60 628.68 0.00 0.00 5,316.28

30/12/2013 264,747.06 4,698.54 617.74 0.00 0.00 5,316.28

30/01/2014 260,048.53 4,709.50 606.78 0.00 0.00 5,316.28

28/02/2014 255,339.02 4,720.49 595.79 0.00 0.00 5,316.28

30/03/2014 250,618.53 4,731.51 584.78 0.00 0.00 5,316.28

30/04/2014 245,887.03 4,742.55 573.74 0.00 0.00 5,316.28

30/05/2014 241,144.48 4,753.61 562.67 0.00 0.00 5,316.28

30/06/2014 236,390.87 4,764.70 551.58 0.00 0.00 5,316.28

30/07/2014 231,626.17 4,775.82 540.46 0.00 0.00 5,316.28

30/08/2014 226,850.35 4,786.96 529.32 0.00 0.00 5,316.2830/09/2014 222,063.38 4,798.13 518.15 0.00 0.00 5,316.28

30/10/2014 217,265.25 4,809.33 506.95 0.00 0.00 5,316.28

30/11/2014 212,455.92 4,820.55 495.73 0.00 0.00 5,316.28

30/12/2014 207,635.37 4,831.80 484.48 0.00 0.00 5,316.28

30/01/2015 202,803.57 4,843.07 473.21 0.00 0.00 5,316.28

28/02/2015 197,960.49 4,854.37 461.91 0.00 0.00 5,316.28

30/03/2015 193,106.12 4,865.70 450.58 0.00 0.00 5,316.28

30/04/2015 188,240.42 4,877.05 439.23 0.00 0.00 5,316.28

30/05/2015 183,363.37 4,888.43 427.85 0.00 0.00 5,316.2830/06/2015 178,474.93 4,899.84 416.44 0.00 0.00 5,316.28

30/07/2015 173,575.09 4,911.27 405.01 0.00 0.00 5,316.28

30/08/2015 168 663 82 4 922 73 393 55 0 00 0 00 5 316 28


69/87

30/04/2017 67,995.89 5,157.62 158.66 0.00 0.00 5,316.28

30/05/2017 62,838.26 5,169.66 146.62 0.00 0.00 5,316.28

30/06/2017 57,668.60 5,181.72 134.56 0.00 0.00 5,316.28

30/07/2017 52,486.88 5,193.81 122.47 0.00 0.00 5,316.2830/08/2017 47,293.07 5,205.93 110.35 0.00 0.00 5,316.28

30/09/2017 42,087.14 5,218.08 98.20 0.00 0.00 5,316.28

30/10/2017 36,869.06 5,230.25 86.03 0.00 0.00 5,316.28

30/11/2017 31,638.81 5,242.46 73.82 0.00 0.00 5,316.28

30/12/2017 26,396.35 5,254.69 61.59 0.00 0.00 5,316.28

30/01/2018 21,141.66 5,266.95 49.33 0.00 0.00 5,316.28

28/02/2018 15,874.71 5,279.24 37.04 0.00 0.00 5,316.28

30/03/2018 10,595.47 5,291.56 24.72 0.00 0.00 5,316.28

30/04/2018 5,303.91 5,303.91 12.38 0.00 0.00 5,316.28


70/87

Industry Name Average Beta Average correlation Total Beta

Advertising 0.93 0.24 3.81

Aerospace/Defense 0.97 0.39 2.49Air Transport 1.04 0.37 2.84

Apparel 1.07 0.30 3.52

Auto & Truck 1.58 0.47 3.40

Auto Parts 1.57 0.42 3.78

Bank 1.51 0.46 3.30

Banks (Regional) 0.67 0.28 2.41

Beverage 0.74 0.29 2.58

Beverage (Alcoholic) 0.63 0.30 2.11

Biotechnology 1.09 0.26 4.14

Broadcasting 1.24 0.36 3.48

Brokerage & Investment Banking 0.76 0.25 3.09

Building Materials 1.02 0.33 3.11

Business & Consumer Services 0.91 0.29 3.11

Cable TV 1.03 0.42 2.44

Chemical (Basic) 1.14 0.36 3.20

Chemical (Diversified) 1.79 0.67 2.66

Chemical (Specialty) 1.04 0.33 3.12

Coal & Related Energy 1.27 0.26 4.96

Computer Services 0.88 0.29 3.05

Computer Software 0.85 0.26 3.29

Computers/Peripherals 1.30 0.32 4.02

Construction 1.18 0.38 3.08

Diversified 1.12 0.44 2.53

Ed ti l S i 0 13 0 03 4 10


71/87

Healthcare Services 0.93 0.24 3.83

Heathcare Information and Technology 0.81 0.25 3.27

Heavy Construction 1.38 0.43 3.24Homebuilding 1.16 0.34 3.42

Hotel/Gaming 0.92 0.29 3.20

Household Products 0.76 0.24 3.24

Information Services 0.84 0.27 3.10

Insurance (General) 1.12 0.43 2.63

Insurance (Life) 1.57 0.57 2.76

Insurance (Prop/Cas.) 1.16 0.46 2.52

Internet software and services 0.90 0.22 4.10

Investment Co. 0.85 0.27 3.18

Machinery 1.19 0.37 3.18

Metals & Mining 1.62 0.36 4.55

Office Equipment & Services 0.81 0.25 3.25

Oil/Gas (Integrated) 1.18 0.56 2.13

Oil/Gas (Production and Exploration) 1.45 0.27 5.32

Oil/Gas Distribution 1.31 0.35 3.74

Oilfield Svcs/Equip. 1.47 0.40 3.68

Packaging & Container 1.00 0.33 3.00

Paper/Forest Products 1.07 0.34 3.18

Pharma & Drugs 0.88 0.32 2.71

Power 0.93 0.34 2.74

Precious Metals 1.26 0.24 5.23

Publshing & Newspapers 0.99 0.30 3.34

R.E.I.T. NA NA NA

R il d 0 86 0 33 2 65


72/87

Semiconductor Equip 1.97 0.35 5.55

Shipbuilding & Marine 1.34 0.33 4.04

Shoe 0.91 0.40 2.30

Steel 1.46 0.41 3.56

Telecom (Wireless) 1.03 0.40 2.59

Telecom. Equipment 1.09 0.32 3.46

Telecom. Services 0.81 0.33 2.49

Thrift 1.68 0.52 3.25

Tobacco 0.38 0.23 1.64

Tranportation 0.97 0.38 2.57

Trucking 1.04 0.32 3.26

Utility (General) 0.87 0.38 2.28

Utility (Water) 0.64 0.24 2.61

Grand Total 1.04 0.32 3.31


73/87

Enter the current risk premium for a mature equity market

Do you want to adjust the country default spread for the additional volatility of the equity market to get to a country premium?

If yes, enter the multiplier to use on the default spread (See worksheet for volatility numbers for selected emerging markets)

Country Region Local Currency Rating Rating-based Default Spread

Albania Eastern Europe & Russia B1 4.00%

Angola Africa Ba3 3.25%

Argentina Central and South America B3 6.00%

Armenia Eastern Europe & Russia Ba2 2.75%

Australia Australia & New Zealand Aaa 0.00%

Austria Western Europe Aaa 0.00%

Azerbaijan Eastern Europe & Russia Baa3 2.00%

Bahamas Caribbean Baa1 1.50%Bahrain Middle East Baa1 1.50%

Bangladesh Asia Ba3 3.25%

Barbados Caribbean Baa3 2.00%

Belarus Eastern Europe & Russia B3 6.00%

Belgium Western Europe Aa3 0.70%

Belize Central and South America Caa3 10.00%

Bermuda Caribbean Aa2 0.50%

Bolivia Central and South America Ba3 3.25%

Bosnia and Herzegovina Eastern Europe & Russia B3 6.00%Botswana Africa A2 1.00%

Brazil Central and South America Baa2 1.75%

Bulgaria Eastern Europe & Russia Baa2 1.75%

Cambodia Asia B2 5.00%

Canada North America Aaa 0.00%

Cayman Islands Caribbean Aa3 0.70%

Chile Central and South America Aa3 0.70%


74/87

China Asia Aa3 0.70%

Colombia Central and South America Baa3 2.00%

Costa Rica Central and South America Baa3 2.00%

Croatia Eastern Europe & Russia Baa3 2.00%

Cuba Caribbean Caa1 7.00%

Cyprus Western Europe B3 6.00%

Czech Republic Eastern Europe & Russia A1 0.85%

Denmark Western Europe Aaa 0.00%

Dominican Republic Caribbean B1 4.00%

Ecuador Central and South America Caa1 7.00%

Egypt Africa B2 5.00%

El Salvador Central and South America Ba3 3.25%

Estonia Eastern Europe & Russia A1 0.85%

Fiji Islands Asia B1 4.00%

Finland Western Europe Aaa 0.00%

France Western Europe Aa1 0.25%

Georgia Eastern Europe & Russia Ba3 3.25%

Germany Western Europe Aaa 0.00%

Greece Western Europe Caa3 10.00%

Guatemala Central and South America Ba1 2.40%

Honduras Central and South America B2 5.00%

Hong Kong Asia Aa1 0.25%

Hungary Eastern Europe & Russia Ba1 2.40%

Iceland Western Europe Baa3 2.00%India Asia Baa3 2.00%

Indonesia Asia Baa3 2.00%

Ireland Western Europe Ba1 2.40%

Isle of Man Financial Center Aaa 0.00%

Israel Middle East A1 0.85%

Italy Western Europe Baa2 1.75%


75/87

Jamaica Caribbean B3 6.00%

Japan Asia Aa3 0.70%

Jordan Middle East Ba2 2.75%

Kazakhstan Eastern Europe & Russia Baa2 1.75%

Kenya Africa B1 4.00%

Korea Asia Aa3 0.70%

Kuwait Middle East Aa2 0.50%

Latvia Eastern Europe & Russia Baa3 2.00%

Lebanon Middle East B1 4.00%

Lithuania Eastern Europe & Russia Baa1 1.50%

Luxembourg Western Europe Aaa 0.00%

Macao Asia Aa3 0.70%

Malaysia Asia A3 1.15%

Malta Western Europe A3 1.15%

Mauritius Africa Baa1 1.50%Mexico Central and South America Baa1 1.50%

Moldova Eastern Europe & Russia B3 6.00%

Mongolia Asia B1 4.00%

Montenegro Eastern Europe & Russia Ba3 3.25%

Morocco Africa Ba1 2.40%

Namibia Africa Baa3 2.00%

Netherlands Western Europe Aaa 0.00%

New Zealand Australia & New Zealand Aaa 0.00%

Nicaragua Central and South America B3 6.00%Nigeria Africa Ba3 3.25%

Norway Western Europe Aaa 0.00%

Oman Middle East A1 0.85%

Pakistan Asia Caa1 7.00%

Panama Central and South America Baa2 1.75%

Papua New Guinea Asia B1 4.00%


76/87

Paraguay Central and South America B1 4.00%

Peru Central and South America Baa2 1.75%

Philippines Asia Ba1 2.40%

Poland Eastern Europe & Russia A2 1.00%

Portugal Western Europe Ba3 3.25%

Qatar Middle East Aa2 0.50%

Romania Eastern Europe & Russia Baa3 2.00%

Russia Eastern Europe & Russia Baa1 1.50%

Saudi Arabia Middle East Aa3 0.70%

Senegal Africa B1 4.00%

Singapore Asia Aaa 0.00%

Slovakia Eastern Europe & Russia A2 1.00%

Slovenia Eastern Europe & Russia Baa2 1.75%

South Africa Africa Baa1 1.50%

Spain Western Europe Baa3 2.00%Sri Lanka Asia B1 4.00%

St. Maarten Africa Baa1 1.50%

St. Vincent & the Grenadines Caribbean B2 5.00%

Suriname Caribbean Ba3 3.25%

Sweden Western Europe Aaa 0.00%

Switzerland Western Europe Aaa 0.00%

Taiwan Asia Aa3 0.70%

Thailand Asia Baa1 1.50%

Trinidad and Tobago Caribbean Baa1 1.50%Tunisia Africa Baa3 2.00%

Turkey Western Europe Ba1 2.40%

Ukraine Eastern Europe & Russia B3 6.00%

United Arab Emirates Middle East Aa2 0.50%

United Kingdom Western Europe Aaa 0.00%

United States of America North America Aaa 0.00%


77/87

Uruguay Central and South America Baa3 2.00%

Venezuela Central and South America B1 4.00%

Vietnam Asia B2 5.00%

Zambia Africa B1 4.00%

Rating Default spread in basis points

A1 85

A2 100

A3 115

Aa1 25

Aa2 50

Aa3 70Aaa 0

B1 400

B2 500

B3 600

Ba1 240

Ba2 275

Ba3 325

Baa1 150

Baa2 175

Baa3 200

Caa1 700Caa2 850

Caa3 1000


78/87

Estimating Country Risk Premiums

5.80%

Yes

1.5

Total Equity Risk Premium Country Risk Premium CDS Default Spread Total Equity Risk Premium

11.80% 6.00% NA NA

10.68% 4.88% NA NA

14.80% 9.00% 13.07% 24.40%

9.93% 4.13% NA NA

5.80% 0.00% 0.86% 6.09%

5.80% 0.00% 0.79% 5.98%

8.80% 3.00% NA NA

8.05% 2.25% NA NA

8.05% 2.25% 2.52% 8.58%

10.68% 4.88% NA NA

8.80% 3.00% NA NA

14.80% 9.00% NA NA

6.85% 1.05% 1.24% 6.66%

20.80% 15.00% NA NA

6.55% 0.75% NA NA

10.68% 4.88% NA NA

14.80% 9.00% NA NA

7.30% 1.50% NA NA8.43% 2.63% 1.44% 6.96%

8.43% 2.63% 1.41% 6.91%

13.30% 7.50% NA NA

5.80% 0.00% NA NA

6.85% 1.05% NA NA

6.85% 1.05% 0.99% 6.28%


79/87

6.85% 1.05% 1.02% 6.33%

8.80% 3.00% 1.35% 6.82%

8.80% 3.00% 3.91% 10.66%

8.80% 3.00% 2.99% 9.28%

16.30% 10.50% NA NA

14.80% 9.00% 6.55% 14.62%

7.08% 1.28% 0.89% 6.13%

5.80% 0.00% 0.69% 5.83%

11.80% 6.00% NA NA

16.30% 10.50% NA NA

13.30% 7.50% 5.76% 13.44%

10.68% 4.88% NA NA

7.08% 1.28% 0.95% 6.22%

11.80% 6.00% NA NA

5.80% 0.00% 0.60% 5.70%6.18% 0.38% 1.44% 6.96%

10.68% 4.88% NA NA

5.80% 0.00% 0.82% 6.03%

20.80% 15.00% NA NA

9.40% 3.60% NA NA

13.30% 7.50% NA NA

6.18% 0.38% 1.03% 6.34%

9.40% 3.60% 3.16% 9.54%

8.80% 3.00% 2.16% 8.04%8.80% 3.00% NA NA

8.80% 3.00% 1.81% 7.51%

9.40% 3.60% 2.54% 8.61%

5.80% 0.00% NA NA

7.08% 1.28% 1.61% 7.21%

8.43% 2.63% 3.03% 9.34%


80/87

14.80% 9.00% NA NA

6.85% 1.05% 1.32% 6.78%

9.93% 4.13% NA NA

8.43% 2.63% 1.97% 7.75%

11.80% 6.00% NA NA

6.85% 1.05% 1.13% 6.49%

6.55% 0.75% NA NA

8.80% 3.00% 1.70% 7.35%

11.80% 6.00% 4.72% 11.88%

8.05% 2.25% 1.58% 7.17%

5.80% 0.00% NA NA

6.85% 1.05% NA NA

7.53% 1.73% 1.14% 6.51%

7.53% 1.73% NA NA

8.05% 2.25% NA NA8.05% 2.25% 1.36% 6.84%

14.80% 9.00% NA NA

11.80% 6.00% NA NA

10.68% 4.88% NA NA

9.40% 3.60% 2.79% 8.98%

8.80% 3.00% NA NA

5.80% 0.00% 0.83% 6.04%

5.80% 0.00% 0.72% 5.88%

14.80% 9.00% NA NA10.68% 4.88% NA NA

5.80% 0.00% 0.41% 5.41%

7.08% 1.28% NA NA

16.30% 10.50% 7.90% 16.65%

8.43% 2.63% 1.36% 6.84%

11.80% 6.00% NA NA


81/87

11.80% 6.00% NA NA

8.43% 2.63% 1.38% 6.87%

9.40% 3.60% 1.59% 7.18%

7.30% 1.50% 1.30% 6.75%

10.68% 4.88% 4.93% 12.19%

6.55% 0.75% 1.28% 6.72%

8.80% 3.00% 2.81% 9.01%

8.05% 2.25% 1.82% 7.53%

6.85% 1.05% 0.78% 5.97%

11.80% 6.00% NA NA

5.80% 0.00% NA NA

7.30% 1.50% 1.42% 6.93%

8.43% 2.63% 2.59% 8.68%

8.05% 2.25% 2.03% 7.84%

8.80% 3.00% 3.14% 9.51%11.80% 6.00% NA NA

8.05% 2.25% NA NA

13.30% 7.50% NA NA

10.68% 4.88% NA NA

5.80% 0.00% 0.41% 5.41%

5.80% 0.00% 0.76% 5.94%

6.85% 1.05% NA NA

8.05% 2.25% 1.43% 6.94%

8.05% 2.25% NA NA8.80% 3.00% 4.21% 11.11%

9.40% 3.60% 1.79% 7.48%

14.80% 9.00% 6.51% 14.56%

6.55% 0.75% NA NA

5.80% 0.00% 0.74% 5.91%

5.80% 0.00% 0.67% 5.80%


82/87

8.80% 3.00% NA NA

11.80% 6.00% 6.55% 14.62%

13.30% 7.50% 2.74% 8.91%

11.80% 6.00% NA NA


83/87

Country Risk Premium Has to be sorted in ascending order

NA Rating spread in basis points

NA A1 85

18.60% A2 100

NA A3 115

0.29% Aa1 25

0.18% Aa2 50

NA Aa3 70

NA Aaa 02.78% B1 400

NA B2 500

NA B3 600

NA Ba1 240

0.86% Ba2 275

NA Ba3 325

NA Baa1 150

NA Baa2 175

NA Baa3 200NA Caa1 700

1.16% Caa2 850

1.11% Caa3 1000

NA

NA

NA

0.48%


84/87

0.53%

1.02%

4.86%

3.48%

NA

8.82%

0.33%

0.03%

NA

NA

7.64%

NA

0.42%

NA

-0.11%1.16%

NA

0.23%

NA

NA

NA

0.54%

3.74%

2.24%NA

1.71%

2.81%

NA

1.41%

3.54%


85/87

NA

0.98%

NA

1.95%

NA

0.69%NA

1.55%

6.08%

1.37%

NA

NA

0.71%

NA

NA1.04%

NA

NA

NA

3.18%

NA

0.24%

0.07%

NANA

-0.39%

NA

10.85%

1.04%

NA


86/87

NA

1.07%

1.38%

0.95%

6.39%

0.92%3.21%

1.73%

0.17%

NA

NA

1.13%

2.88%

2.04%

3.71%NA

NA

NA

NA

-0.39%

0.14%

NA

1.14%

NA5.31%

1.68%

8.76%

NA

0.11%

0.00%


87/87

NA

8.82%

3.11%

NA

cf term paper vishal

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