Using the Valuation Software -
To utilize the UPS data file you will need to open excel on your computer. Click on file in the upper left hand corner to open your data file from your drive. Click on OK for each of the next two prompts. You may need to click on the don't save box if a prompt for saving changes to MGnames in a gray box appears when beginning the process. You will then be in eVal, the valuation software. The software may require you to have a low security setting because of macro settings. It depends upon your version of excel. If you open the software before first saving it and get an error message for configuration, click OK if following that it says there is a run time error 91, click end. (You do not need to run the data base)
Begin by clicking on the financial statements tab at the bottom. You should see five years of data. Clicking on ratios will bring up the ratios for your company. This will be used in your financial analysis. After you have completed your industry/strategy analysis, accounting analysis, and financial analysis you can start your forecasting analysis which will be completed when you input your forecast using the forecast tab. Make sure to enter your forecast assumptions beginning moving left to right for each of the five years and the terminal year.You may use the forecast percentages already in the software for the balance sheet since they are relying on a naïve prediction model that believes the most recent percentage is as good a predictor as any. This is not the case for the income statement where you will need all of the knowledge gained to this point about UPS to prepare your forecast. You will also need to include a percentage for the terminal year which can be based upon the competitive equilibrium assumption discussed in class or the forecasting section of the text. This is a simplifying assumption that will keep the company in a steady state going forward.
You will need to enter your cost of equity estimate in the valuation parameters area of eVal. If you use the CAPM to make this calculation please use the betaprovided to you. For UPS it would be the S&P Beta of .97. Use the US Treasury rate for 10 years at 3/23/2016 for the risk free rate. Make sure to use the 3/23/2015 date for the valuation parameters date. Please be sure to include your calculation for the cost of equity in your exam.
After inputting your assumptions and the cost of equity (in the valuation parameter section),the software will calculate the present value of cash flows discussed in your text chapter on valuation. This will result in a share price based upon your assumptions. You can see that share price in the upper left hand corner when using any tab.
Make sure to save your data file before exiting eVal. For the mid-term exam please use the beta of .97 noted above and not one from another source. You will also need to choose a risk premium for utilizing the CAPM. While risk premiums historically are in the 5-7% range, please use a rate in the 6-7% for your exam.
Assignment link -
https://www.dropbox.com/s/pewqshz7oylv26w/Assignment.rar?dl=0.