Discounted Cash Flow (DCF) Analysis Unlevered

Microsoft Corporation (MSFT)

Technology

Operating Data

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 (%)
EBITDA	30,804.85	33,031.19	24,461.73	32,260.10	38,676.54	46,737.85	55,371.60	51,799.01	56,196.75	60,967.85	66,144.02
EBITDA (%)
EBIT	27,052.53	27,821.22	18,500.70	25,642.17	29,898.27	36,474.28	43,693.23	41,627.62	45,161.80	48,996.04	53,155.80
EBIT (%)
Depreciation	3,752.32	5,209.97	5,961.03	6,617.92	8,778.27	10,263.57	11,678.37	10,171.39	11,034.94	11,971.81	12,988.22
Depreciation (%)

Balance Sheet Data

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
Total Cash	77,023.80	85,712.63	96,527.44	113,243.06	132,977.76	133,768.47	133,823.10	154,140.97	167,227.54	181,425.15	196,828.15
Total Cash (%)
Account Receivables	17,484.89	19,546.06	17,911.15	18,276.77	22,433.36	26,475.58	29,523.13	30,200.16	32,764.15	35,545.83	38,563.67
Account Receivables (%)
Inventories	1,938.44	2,657.08	2,900.97	2,251.55	2,182.50	2,659.70	2,063.85	3,399.57	3,688.19	4,001.32	4,341.03
Inventories (%)
Accounts Payable	5,472.78	7,988.62	6,681.59	7,192.21	7,387.65	8,619.19	9,388.00	10,567.33	11,464.49	12,437.83	13,493.80
Accounts Payable (%)
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 (%)

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

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
EBITDA	30,804.85	33,031.19	24,461.73	32,260.10	38,676.54	46,737.85	55,371.60	51,799.01	56,196.75	60,967.85	66,144.02
EBIT	27,052.53	27,821.22	18,500.70	25,642.17	29,898.27	36,474.28	43,693.23	41,627.62	45,161.80	48,996.04	53,155.80
Tax Rate	19.18%	20.65%	34.12%	19.89%	14.76%	54.57%	10.18%	24.76%	24.76%	24.76%	24.76%
EBIAT	21,863.43	22,074.97	12,188.85	20,541.54	25,486.67	16,571.13	39,244.70	31,318.93	33,977.90	36,862.63	39,992.27
Depreciation	3,752.32	5,209.97	5,961.03	6,617.92	8,778.27	10,263.57	11,678.37	10,171.39	11,034.94	11,971.81	12,988.22
Accounts Receivable	-	-2,061.17	1,634.91	-365.62	-4,156.59	-4,042.23	-3,047.55	-677.03	-2,563.99	-2,781.68	-3,017.84
Inventories	-	-718.64	-243.89	649.42	69.06	-477.20	595.85	-1,335.72	-288.62	-313.13	-339.71
Accounts Payable	-	2,515.83	-1,307.03	510.62	195.45	1,231.53	768.82	1,179.32	897.17	973.34	1,055.97
Capital Expenditure	-	1,229.49	454.48	2,398.46	-209.52	3,500.79	2,298.95	-2,749.29	949.33	1,029.92	1,117.37
UFCF	25,615.75	28,250.44	18,688.35	30,352.34	30,163.33	27,047.59	51,539.14	37,907.61	44,006.72	47,742.90	51,796.27
WACC
PV UFCF								30,404.03	31,610.12	30,712.72	29,840.79
SUM PV UFCF											196,936.65

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	86.41

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