Can Someone fill out the assumptions and reasoning for the assumptions for the given data for southwest airlines? – timelynursingwriters.com

Business Finance – timelynursingwriters.com

Can Someone fill out the assumptions and reasoning for the assumptions for the given data for southwest airlines? – timelynursingwriters.com

Table 1

Assumptions for ValuePro.net Valuation

Company Name – Southwest Airlines (LUV)

ValuePro.net Assumptions

Your Assumptions

Explain the Reasoning for Your Assumptions

Excess Return Period (Years) (10 years is appropriate)

10

Revenues ($ mil) (From Income Statement)

17182.00

Growth Rate (%) (Estimated Annual Growth Rate in Earnings in Future)

14.00

Net Operating Profit Margin (%) (EBIT from Income Statement)

4.01

Tax Rate (%) (From Income Statement: Taxes / Earnings Before Taxes)

38.54

Stock Price ($) (Current Price per Share)

59.37

Shares of Stock Outstanding (mil.) (Be careful with decimal)

722.30

10 Yr. Treasury Bond Yield (%)

5

Bond Spread to Treasury (%) (1.5 is appropriate)

1.5

Preferred Stock Yield (%)

7.5

Depreciation Rate (%) (Percentage of Revenue; Calculate)

4.94

Investment Rate (%) (Percentage of Revenue for Capital Expenditures – Calculate)

7.89

Working Capital (%) (Percentage of Revenue – WC is Current Assets; Calculate)

-1.79

Short Term Assets ($ mil.) (Current Assets from Balance Sheet)

4514

Short-Term Liabilities ($ mil.) (Current Liabilities from Balance Sheet)

5708

Equity Risk Premium % (Should be between 5% and 6%)

3

Company Beta for Stock (Number) (Look up Beta)

1.05

Value (Book) of Debt Outstanding ($ mil.) (L-T + S-T Debt from Balance Sheet)

2708

Value Preferred Stock Outstanding ($ mil)

0

Company WACC (%) (Look up or Calculate)

7.9

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