Google Company Analysis
Prepared by Matt Decuir
Exhibit 14 – Company Valuation and Assumptions
|
Valuation (in millions) |
|
|
PV(Free Cash Flows) |
109,075
|
|
PV(Continuing Free Cash Flows) |
47,734
|
|
Less Debt Liabilities |
0
|
|
Less Preferred Equity |
0
|
|
Common Equity value |
156,809
|
|
Shares Outstanding |
311.55
|
|
Value per share (not in millions) |
503.32
|
|
Last Market price (not in millions) |
$504.77
|
|
Difference |
(1.45) |
|
Capital Asset Pricing Model |
|
Risk Free Rate |
5.24% |
|
Market Risk Premium |
7.00% |
|
Beta |
1.20 |
|
|
|
|
CAPM = |
13.61% |
|
Beta Calculations: |
|
|
|
|
Yahoo |
Microsoft |
Google |
|
Beta (a) |
1.620 |
1.109 |
1.293 |
|
Standard Error |
0.170 |
0.082 |
0.290 |
|
|
|
|
|
|
Adjusted Beta |
1.415 |
1.073 |
1.196 |
|
|
|
|
|
|
Industry Average Beta
(b) |
1.24 |
|
|
Google's Adjusted Beta |
1.20 |
|
|
|
|
|
|
|
(a) Beta calculated using weekly returns starting January
1, 2002, and ending June 8, 2007, using the S&P 500 as the market index. |
|
(b) Industry Average beta calculated using equal weighting of Yahoo and Microsoft's
adjusted betas. |
