Free Cash Flow of Mercury

2007 2008 2009 2010

Revenue 479,329 489,028 532,137 570,319

Less: Operating Expenses 423,837 427,333 465,110 498,535

Less: Corporate Overhead 8,487 8,659 9,422 10,098

EBIT 47,005 53,036 57,605 61,686

Less: Taxes 18,802 21,214 23,042 24,674

NOPAT 28,203 31,822 34,563 37,012

Add: Depreciation 9,587 9,781 10,643 11,406

Less: Capital Expenditures 11,983 12,226 13,303 14,258

Less: Changes in Working Capital 4,567 2,649 9,805 8,687

Unlevered Free Cash Flow (UFCF) 21,240 26,728 22,098 25,473

Terminal Value = FCF(1+g)/WACC-g

Discounted Cash Flow = FCF/1+g 19,175 21,783 16,259 16,919

Total Discounted Cash Flow 326,703

If Acquisition Price = Current Equity 214,067

NPV 112,636

Free Cash Flow of Mercury

2011

597,717

522,522

10,583

64,612

25,845

38,767

11,954

14,943

6,233

29,545

391,655

17,716 234,851