Student capstone packet — Harbor DCF
Fictional case; student version; units $000. The chapter is a worked teaching walkthrough. This packet and learner workbook are the independent construction assessment. Do not consult the solution until submitting your model and recommendation. Source inputs are stipulated, not verified observations about an actual company.
Operating and transaction source packet
| Source assumption | Value |
|---|---|
| Scenario | 0 |
| Revenue | 5,000 |
| EBITDA margin | 0.16 |
| DA ratio | 0.02 |
| CapEx ratio | 0.024 |
| NWC ratio | 0.09 |
| Opening NWC | 450 |
| Growth | 0.04 |
| Tax | 0.25 |
| Discount rate | 0.2 |
| Terminal growth | 0.02 |
| Excess cash | 50 |
| Debt | 500 |
| Asking EV | 3,200 |
| Downside growth | 0 |
| Downside margin | 0.14 |
| Downside CapEx | 0.03 |
| Downside NWC | 0.1 |
| Equity weight | 0.7 |
| Cost equity | 0.24 |
| Cost debt | 0.1 |
Forecast five explicit years plus a separate terminal cash-flow year. Keep the WACC illustration distinct from the packet discount rate. Rebuild downside operations with flat sales, 14% margin, 3% CapEx and 10% NWC.
A supported valuation memo must explain normalized UFCF, terminal reinvestment, timing, risk and the bid range.
Required model and written deliverables
Construct every relevant sheet in the learner workbook, with live formulas, visible units, linked supporting schedules and checks. Submit a three-to-five-page memorandum, assumption/evidence register, base case and downside, plus a model-defense note explaining one controlled input change and its consequences. Identify which facts must be verified before a real bid or loan commitment.
Independent grading rubric
| Dimension | Points | Full-credit standard |
|---|---|---|
| Source and assumption reconstruction | 20 | Correct perimeter, periods, units and documented unresolved facts |
| Formula construction and schedule links | 30 | Reproducible equations; no copied solution outputs or plugs |
| Reconciliation and diagnostic checks | 20 | All critical identities demonstrated and failures explained |
| Downside and acquisition judgment | 20 | Coherent stress, funding implications and supported recommendation |
| Communication and evidence | 10 | Reviewable memo, limitations, sources and decision gates |
Pass requires at least 80/100 and all critical checks. A nonpositive terminal denominator, double-counted debt, time-zero discount error, or concealed unsupported growth assumption is critical. A well-supported recommendation to decline earns full credit; a desired deal outcome is not the grading criterion. Legal, tax and lending judgments require adviser review, not a spreadsheet certificate.