Your job as an analyst is to produce valuation report for yourinvestment firm. Your current focus is on Consun Energy Inc., acompany which operates in the renewable energy industry. Last year,the company earned $30 million before interest and taxes onrevenues of $80 million. Capital expenditure were $20 million, anddepreciation was $15 million. The addition to work capital were $6million. The firm’s weighted average cost of capital is 12.45%, themarginal tax rate is 40% and the expected growth rate of cash flowis 5%. The market value of the debt is $25 million.
(In no more than a paragraph)
- Conduct a brief Porter’s five competitiveforces analysis on this industry and summarize the implication ofyour analysis in terms the ease of profitability.
- What stage in the industry life cycle do you think therenewable energy industry is? Corroborate your choice with abrief discussion of industry evidence.
- Present in a brief discussion, the importantmacroeconomic variables to consider when analyzing the renewableenergy industry and why you think those variables are important toyour analysis.
- What is your estimate of the intrinsic value of the Consun'sequity using the financial information provided above?
