Discounted Cash Flow (DCF) Analysis Levered

Microsoft Corporation (MSFT)

Technology

Free Cash Flow

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Actual	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Revenue	77,849.00	86,832.77	93,579.68	85,316.60	89,949.29	110,358.78	125,842.12	136,878.47	148,882.71	161,939.73	176,141.84
Revenue (%)
Operating Cash Flow	28,835.27	32,232.33	29,084.56	33,324.66	39,505.73	43,878.65	52,186.73	52,684.52	57,304.96	62,330.60	67,796.99
Operating Cash Flow (%)
Capital Expenditure	4,258.34	5,487.83	5,942.31	8,343.96	8,131.42	11,631.82	13,930.72	11,456.73	12,461.48	13,554.36	14,743.07
Capital Expenditure (%)
Free Cash Flow	33,093.61	37,720.16	35,026.87	41,668.63	47,637.14	55,510.47	66,117.45	64,141.25	69,766.44	75,884.96	82,540.07

Weighted Average Cost Of Capital

Share price	$ 166.5
Diluted Shares Outstanding	7,673.00
Cost of Debt
Tax Rate	10.18
After-tax Cost of Debt	-0.46
Risk-Free Rate
Market Risk Premium
Cost of Equity	12.26
Total Debt	66,662.00
Total Equity	1,277,554.50
Total Capital	1,344,216.50
Debt Weighting	4.96
Equity Weighting	95.04
Wacc

Build Up Free Cash Flow

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Actual	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Revenue	77,849.00	86,832.77	93,579.68	85,316.60	89,949.29	110,358.78	125,842.12	136,878.47	148,882.71	161,939.73	176,141.84
Operating Cash Flow	28,835.27	32,232.33	29,084.56	33,324.66	39,505.73	43,878.65	52,186.73	52,684.52	57,304.96	62,330.60	67,796.99
Capital Expenditure	4,258.34	5,487.83	5,942.31	8,343.96	8,131.42	11,631.82	13,930.72	11,456.73	12,461.48	13,554.36	14,743.07
Free Cash Flow	33,093.61	37,720.16	35,026.87	41,668.63	47,637.14	55,510.47	66,117.45	64,141.25	69,766.44	75,884.96	82,540.07
WACC
PV LFCF								57,335.52	55,746.71	54,201.93	52,699.96
SUM PV LFCF											297,327.58

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	11.87
Free cash flow (t + 1)	50,433.04
Terminal Value	640,826.44
Present Value of Terminal Value	365,739.81

Intrinsic Value

Enterprise Value	542,512.96
Net Debt	55,311.04
Equity Value	487,201.92
Shares Outstanding	7,673.00
Equity Value Per Share	112.67

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