Notethatthetaxratechangesinyear11,requiringustogo
backtotheoperatingincomeinthatyear.Addingthepresent
valueoftheterminalvaluetothepresentvalueofthefree
cash flows to the firm in the first 10 years, we get:
Addingthevalueofcashandmarketablesecurities(C=3,018
million) and subtracting debt (C=558 million) and the
estimatedvalueofminorityinterests(C=55million)yieldsa
value for the equity of 33,715 million euros.
Subtractingthevalueofmanagementoptions(C=180million)
and dividing by the number of shares outstanding (316
million)resultsinavalueper shareof106.12euros,about
14%lowerthanthestockpriceof 123 eurosprevailingatthe
time of this valuation.
How Much Detail?
Oneissuethatanalystsconfrontwhendoingvaluationisthe
levelofdetailtobreakitemsdowninto.Shouldwebeginwith
earningsandestimate growthratesorisitmorepreciseto
begin with revenues and forecast individual operating
expenseitems?Thereisnorightanswertothisquestion,but