Group
Conclusions: Apple iTV
All of the numbers below were extracted from your emails to me� So, I bear no responsibility for strange looking numbers or outliers�. That said, here is the bottom line.
On return on capital, the distribution of values was as follows:
The median return on capital was about 12%, with a substantial range on the estimates.
On cost of capital, the numbers looked as follows:
Not surprisingly, a much tighter estimate on values. My guess is that the outliers here can be explained by the use of the company�s beta (for the really high numbers) or book value of equity in computing cost of capital (for the lower numbers). The median cost of capital was about 11%.
On the NPV for the finite life case, the distribution of values was as follows:
The median NPV was positive but a large proportion (about 40%) had negative net present values.
Things did look brighter when you considered the longer life scenario:
Only a handful of analyses had negative net present values and the median was almost $ 2 billion.
Based upon all this number crunching, your decision on whether to invest or not to invest could be categorized as follows:
NPV results %
of groups Decision
+�ve for both finite and longer life 52% Invest: 100%
Do not: 0%
+�ve for longer life, -ve for finite 38% Invest: 40%
Do not invest: 40%
Invest and don�t: 20%
-ve for both scenarios 10% Do not invest: 100%
No matter what you concluded, thank
you for putting in the effort that you obviously did� I truly appreciate it.