Discounted Cash Flow (DCF) Analysis Levered

Free Cash Flow Microsoft C

Year A / P	2012 Actual	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Projected	2018 Projected	2019 Projected	2020 Projected	2021 Projected
Revenue	86,833	93,580	85,320	89,950	110,360	117,864	125,879	134,439	143,581	153,344
Revenue (%)
OperatingCashFlow	32,231	29,080	33,325	39,507	43,884	45,024	48,086	51,356	54,848	58,578
OperatingCashFlow (%)
CapitalExpenditure	-5,485	-5,944	-8,343	-8,129	-11,632	-9,901	-10,574	-11,293	-12,061	-12,881
CapitalExpenditure (%)
FreeCashFlow	26,746	23,136	24,982	31,378	32,252	35,124	37,512	40,063	42,787	45,697

Year A / P	2012 Actual	2013 Actual	2014 Actual	2015 Actual	2016 Actual
Revenue	86,833	93,580	85,320	89,950	110,360
Revenue (%)
OperatingCashFlow	32,231	29,080	33,325	39,507	43,884
OperatingCashFlow (%)
CapitalExpenditure	-5,485	-5,944	-8,343	-8,129	-11,632
CapitalExpenditure (%)
FreeCashFlow	26,746	23,136	24,982	31,378	32,252

Year A / P	2017 Projected	2018 Projected	2019 Projected	2020 Projected	2021 Projected
Revenue	117,864	125,879	134,439	143,581	153,344
Revenue (%)
OperatingCashFlow	45,024	48,086	51,356	54,848	58,578
OperatingCashFlow (%)
CapitalExpenditure	-9,901	-10,574	-11,293	-12,061	-12,881
CapitalExpenditure (%)
FreeCashFlow	35,124	37,512	40,063	42,787	45,697

Weighted Average Cost Of Capital Microsoft C

Share Price	$ 117.13
Diluted Shares Outstanding	8013
Cost of Debt
Tax Rate	54.6
After-tax Cost of Debt	3.7
Risk Free Rate
Market Risk Premium
Cost of Equity	11.11
Total Debt	72,242.00
Total Equity	912,911.22
Total Capital	985,153.22
Debt Weighting	7.33
Equity Weighting	92.67
Wacc

Build Up Free Cash Flow Microsoft C

Year A / P	2012 Actual	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Projected	2018 Projected	2019 Projected	2020 Projected	2021 Projected
Revenue	86,833	93,580	85,320	89,950	110,360	117,864	125,879	134,439	143,581	153,344
OperatingCashFlow	32,231	29,080	33,325	39,507	43,884	45,024	48,086	51,356	54,848	58,578
CapitalExpenditure	-5,485	-5,944	-8,343	-8,129	-11,632	-9,901	-10,574	-11,293	-12,061	-12,881
FreeCashFlowFreeCashFlow	26,746	23,136	24,982	31,378	32,252	35,124	37,512	40,063	42,787	45,697
WACC
PV LFCF						31,729	30,611	29,532	28,492	27,488
SUM PV LFCF										147,852

Year A / P	2012 Actual	2013 Actual	2014 Actual	2015 Actual	2016 Actual
Revenue	86,833	93,580	85,320	89,950	110,360
OperatingCashFlow	32,231	29,080	33,325	39,507	43,884
CapitalExpenditure	-5,485	-5,944	-8,343	-8,129	-11,632
FreeCashFlowFreeCashFlow	26,746	23,136	24,982	31,378	32,252
WACC
PV LFCF
SUM PV LFCF

Year A / P	2017 Projected	2018 Projected	2019 Projected	2020 Projected	2021 Projected
Revenue	117,864	125,879	134,439	143,581	153,344
OperatingCashFlow	45,024	48,086	51,356	54,848	58,578
CapitalExpenditure	-9,901	-10,574	-11,293	-12,061	-12,881
FreeCashFlowFreeCashFlow	35,124	37,512	40,063	42,787	45,697
WACC
PV LFCF	31,729	30,611	29,532	28,492	27,488
SUM PV LFCF					147,852

Terminal Value Microsoft C

Growth in perpetuity method:
Long term growth rate
WACC (%)	10.7
Free cash flow (t+1)	47,524.50
Terminal Value	709,320.90
Present Value of Terminal Value	426,682.32

Intrinsic Value Microsoft C

Enterprise Value	574,534
Net Debt	-61,526
Equity Value	636,060
Shares Outstanding	7,794
Equity Value Per Share	82

Results Levered DCF Microsoft C

${Wacc}/{Long \space Term \space Growth}$	-4 (%)	-3 (%)	-2 (%)	-1 (%)	0 (%)	1 (%)	2 (%)	3 (%)	4 (%)
8.7 (%)	56 Sell	59 Sell	62 Sell	66 Sell	71 Sell	78 Sell	86 Sell	97 Sell	112 Sell
9.2 (%)	54 Sell	57 Sell	60 Sell	64 Sell	68 Sell	73 Sell	80 Sell	90 Sell	102 Sell
9.7 (%)	53 Sell	55 Sell	58 Sell	61 Sell	65 Sell	70 Sell	76 Sell	84 Sell	94 Sell
10.2 (%)	51 Sell	53 Sell	56 Sell	59 Sell	62 Sell	66 Sell	72 Sell	78 Sell	87 Sell
10.7 (%)	50 Sell	52 Sell	54 Sell	57 Sell	60 Sell	64 Sell	68 Sell	74 Sell	82 Sell
11.2 (%)	49 Sell	50 Sell	52 Sell	55 Sell	58 Sell	61 Sell	65 Sell	70 Sell	77 Sell
11.7 (%)	47 Sell	49 Sell	51 Sell	53 Sell	56 Sell	59 Sell	62 Sell	67 Sell	72 Sell
12.2 (%)	46 Sell	48 Sell	50 Sell	52 Sell	54 Sell	57 Sell	60 Sell	64 Sell	69 Sell
12.7 (%)	45 Sell	47 Sell	48 Sell	50 Sell	52 Sell	55 Sell	58 Sell	61 Sell	65 Sell

${Wacc}/{Long \space Term \space Growth}$	-4 (%)	-3 (%)	-2 (%)	-1 (%)	0 (%)
8.7 (%)	56 Sell	59 Sell	62 Sell	66 Sell	71 Sell
9.2 (%)	54 Sell	57 Sell	60 Sell	64 Sell	68 Sell
9.7 (%)	53 Sell	55 Sell	58 Sell	61 Sell	65 Sell
10.2 (%)	51 Sell	53 Sell	56 Sell	59 Sell	62 Sell
10.7 (%)	50 Sell	52 Sell	54 Sell	57 Sell	60 Sell

${Wacc}/{Long \space Term \space Growth}$	1 (%)	2 (%)	3 (%)	4 (%)
11.2 (%)	61 Sell	65 Sell	70 Sell	77 Sell
11.7 (%)	59 Sell	62 Sell	67 Sell	72 Sell
12.2 (%)	57 Sell	60 Sell	64 Sell	69 Sell
12.7 (%)	55 Sell	58 Sell	61 Sell	65 Sell

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