Running Head: Business Valuation Ii Two-Stage

Running Head: Business Valuation IINameCourseInstitutionTutorDateTwo-Stage DCF Valuation of Apple as of March 1, 2013When conducting two-stage DCF valuation, we take into consideration the growth rates of the extraordinary growth phase and the consistent-growth phase. The H model allows for the use of both growth rates in evaluation of either the firm’s value of the equity being valued. The H model can be used to calculate a firm’s intrinsic value using the following formula: Apple indicated increasing growth from 2001-2012. Using the H model, we assume that the extraordinary phase lasts for 2H time.Thus, t = 2H =12 yearsH =, We assume that the stable growth began after the 6th year onwards. Using the H model to calculate the intrinsic value of Apple for 2013: Using the above figures:20052006200720082009201020112012Average2005-2012Operating income6,8138,03812,31620,59820,04920,95617,01819,411Cash, cash equivalents & marketable shares8,26110,11015,386 24,490 23,46425,62025,95229,129Total assets11,51617,20525,34739,57247,50175,183116,371176,064Non-cash ROEThe value of Apple in 2013, QUOTE