Corrections to Valuation Book (in bold)

Page Number Correction/Addendum
195 In illustration 10.2,

Dividends per share in 1994 = $ 2.00 (not $ 2.04)

198 Fifth line from the top..

"the fundamental growth model described in Chapter 7 (not chapter 5).

200 In illustration 10.5

Length of the high-growth period = 5 years

219 FCFE = Net Income - (1 - Debt Ratio) (Capital expenditures - depreciation) - (1 - Debt ratio) (Change in Working Capital) {not added, but subtracted)
221 In illustration 11.1

Chg in Working Capital (instead of ¶ Working Capital)

231 The expected cash flows were computed using

- (Cap Ex - Depr.) (.9) [not (Cap Ex - Depr.) (.09)]

- Chg in Working Capital (.9) [not Chg in Working Capital (.09)]

238 The table has to be corrected as follows:

EBITDA = FCFF + EBIT(t) + Capital Expenditures + Chg in Working Capital

NOI (1-t) = FCFF + (Cap Ex - Depr) + Non oper Exp (1-t) + Chg in Working Capital

EBIT (1-t) = FCFF + (Cap Ex - Depr) + Chg in Working Capital

At the bottom of the table,

EBIT (1-t) = EBITDA(1-t) - Depreciation (1-t)

EBIT = NOI - Nonoperating expenses

243 Add to Base year information

Market Value of debt outstanding now = $ 2,740.58 million

255 The current FCFF is estimated by assuming that the change in working capital = 0
294
295
298 In illustration 14.6

The treasury bond rate used is 6%

310

The same correction applies to the value/FCFF multiple.

340 See correction from page 294 above.