We now have the basic company cash flow and share information we need, so let's get to work on the estimated growth section.
In cell D8, enter the following: Year
In cell D9, enter the following: 1
In cells D10 through D13, enter the numbers 2, 3, 4, and 5 respectively. We will provide specific growth estimates for these years.
In cell D14, enter the following: Terminal:
Terminal corresponds to the terminal growth rate, better stated as the estimated growth rate for years 6 through the end of time. Your spreadsheet should now look something like Figure 4.
Figure 4: Growth year labels (click for full image)
Now it is time to enter the estimated growth rates for each year.
In cell E8, enter the following column header: Rate
For cells E9 through E14, we want to enter the growth as a percentage for each of those years. Note that if we enter the number followed by a percent sign (%), the spreadsheet will change that cell to use the Percent format, which is what we want.
Using a combination of analyst expectations and our Magic 8 Ball, we predict that WITW should have the following growth in the next 5 years:
|
Year |
Rate |
|---|---|
|
1 |
7% |
|
2 |
3% |
|
3 |
9% |
|
4 |
10% |
|
5 |
11% |
Insert the appropriate numbers into the spreadsheet. For the Terminal Rate, we assume that the company will have at least 3% growth years 6 and beyond.
In cell E14, enter the following: 3%
Your spreadsheet should now look like Figure 5.
Figure 5: Growth estimates (click for full image)
With our growth estimates in place, it is time to do a little more calculating.
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