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	91,155.97	96,570.63	110,360.92	125,844.55	136,528.76	148,120.05	160,695.44	174,338.48
Revenue (%)
Operating Cash Flow	28,835.27	32,501.51	29,664.76	33,326.62	39,507.05	43,879.50	52,187.74	51,662.48	56,048.63	60,807.16	65,969.68
Operating Cash Flow (%)
Capital Expenditure	-4,258.34	-5,487.83	-5,942.31	-8,340.77	-8,131.25	-11,632.04	-13,930.99	-11,181.71	-12,131.03	-13,160.96	-14,278.32
Capital Expenditure (%)
Free Cash Flow	24,576.93	27,013.68	23,722.45	24,985.85	31,375.80	32,247.46	38,256.74	40,480.78	43,917.59	47,646.20	51,691.36

Weighted Average Cost Of Capital

Share price	$ 139.76
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	12.14
Total Debt	72,850.00
Total Equity	1,072,378.48
Total Capital	1,145,228.48
Debt Weighting	6.36
Equity Weighting	93.64
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	91,155.97	96,570.63	110,360.92	125,844.55	136,528.76	148,120.05	160,695.44	174,338.48
Operating Cash Flow	28,835.27	32,501.51	29,664.76	33,326.62	39,507.05	43,879.50	52,187.74	51,662.48	56,048.63	60,807.16	65,969.68
Capital Expenditure	-4,258.34	-5,487.83	-5,942.31	-8,340.77	-8,131.25	-11,632.04	-13,930.99	-11,181.71	-12,131.03	-13,160.96	-14,278.32
Free Cash Flow	24,576.93	27,013.68	23,722.45	24,985.85	31,375.80	32,247.46	38,256.74	40,480.78	43,917.59	47,646.20	51,691.36
WACC
PV LFCF								32,467.85	31,546.10	30,650.51	29,780.35
SUM PV LFCF											193,390.58

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	11.66
Free cash flow (t + 1)	53,868.12
Terminal Value	703,239.13
Present Value of Terminal Value	405,149.13

Intrinsic Value

Enterprise Value	602,085.78
Net Debt	-60,973.10
Equity Value	663,058.88
Shares Outstanding	7,673.00
Equity Value Per Share	85.85

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