Dollars In Millions Sales (Net) Cost of Goods Sold Gross Profit Selling, General, & Admin Expenses Operating Income Before Depreciation

PNG Airlines is positioning itself for global expansion. The Chief Executive Officer of the company has asked its Chief Financial Officer to prepare a valuation report based on free cash flow (FCF) projections. The CFO needs your expertise in this matter. Please refer to the Excel file given to you with this assignment. The Excel file has PNG’s financial statements for the last 5 years. This file also provides you with certain valuation assumptions that you would need. Using discounted PV method, you are required to:

(1) Prepare free cash flow (FCF) projections for the next 10 years.

(2) Determine PNG’s terminal value at the end of 10^th year.

(3) Based on discounted free cash flows, determine enterprise value, equity value and value per share.

(4) Write a 5-7 pages long report covering airline industry trends, PNG’s financial strengths, PNG’s valuation potential and suggestions for value enhancement, if any. (NOTE: You may use annual reports of airlines in America to prepare the background information assuming that the qualitative information pertains to PNG airlines)