Project Tort

Weighted Average Cost of Capital

Standard Detailed Calculation

WACC Calculation

Levered Gross Debt (2) / Statutory Unlevered

Selected Comparables Beta (1) Mk Cap. (3) Tax Rate (Asset) Beta*
(%) (%)

Cesky Telkom 1.023 19.8% 31.0% 0.900

Matav 1.738 9.2% 16.0% 1.613
TPSA 1.437 31.6% 19.0% 1.144
Turkcell 2.218 7.9% 30.0% 2.102

Average 1.604 17.1% 24.0% 1.440

Median 1.588 14.5% 24.5% 1.379

Selected Unlevered Beta 1.379

Assumptions
Gross Debt / Gross Debt / Relevered Corporate Cost of Debt Cost of Implied Risk Free Rate (4) 7.41%
Agg Value (2) Market Value Beta * risk spread (pre-tax) (after-tax) Equity ** WACC Market Risk Premium (5) 4.00%
(%) (%) (%) (%) (%) (%) Corporate Tax Rate 30.0%
0.0% 0.0% 1.379 1.0% 8.4% 5.9% 12.9% 12.9%
10.0% 11.1% 1.486 1.4% 8.9% 6.2% 13.4% 12.6%
20.0% 25.0% 1.620 1.9% 9.3% 6.5% 13.9% 12.4% Definitions
30.0% 42.9% 1.792 2.3% 9.7% 6.8% 14.6% 12.3% * Unlevered Beta =
40.0% 66.7% 2.022 2.8% 10.2% 7.1% 15.5% 12.2% Levered Beta /
50.0% 100.0% 2.344 3.2% 10.6% 7.4% 16.8% 12.1% [ 1 + (Debt/Equity)x(1-Tax Rate) + (Preferred/Equity) ]
60.0% 150.0% 2.826 3.7% 11.1% 7.8% 18.7% 12.1%
70.0% 233.3% 3.630 4.1% 11.5% 8.1% 21.9% 12.2% ** Cost of Equity =
80.0% 400.0% 5.239 4.6% 12.0% 8.4% 28.4% 12.4% Risk Free Rate + (Levered Beta)x(Mkt Risk Premium)
90.0% 900.0% 10.064 5.0% 12.4% 8.7% 47.7% 12.6%

Notes
1. Source: Barra Book, 8-Apr-05
2. Gross Fin. Debt = LT debt + ST debt + preferred stock / Aggregate Value = Market Cap + Net Fin. Debt + Min. Interests
3. Market Data as of 04-Feb-20
4. 10-y local government bond - reference rate as of 04-Feb-20
5. Morgan Stanley Estimates
MORGAN STANLEY DEAN WITTER
Corporate Bridge Group
This spreadsheet is designed to be used only in an academic context to illustrate concepts covered in
Corporate Bridge training courses. THIS SPREADSHEET IS NOT TO BE USED FOR ANY RESEARCH OR
TRADING PURPOSES. No responsibility is accepted by the Corporate Bridge Group.
Corporate Bridge does not accept any obligation to correct or update this spreadsheet or to inform
any user of the spreadsheet if the spreadsheet is inaccurate.

For further information and queries, please contact

info@educorporatebridge.com
www.educorporatebridge.com
s covered in
ANY RESEARCH OR
Selected Unlevered Beta #REF!

MORGAN STANLEY
 Weighted Average Cost of Capital

Debt / Debt / Levered Risk Cost of Debt Cost of

Agg. Value Equity Beta Spread Pre-Tax After-Tax Equity WACC

0% 0% #REF! 13.0% 9.9% #REF! #REF!

5% 5% #REF! 13.0% 9.9% #REF! #REF!

10% 11% #REF! 13.0% 9.9% #REF! #REF!

15% 18% #REF! 13.0% 9.9% #REF! #REF!

20% 25% #REF! 13.0% 9.9% #REF! #REF!

25% 33% #REF! 13.0% 9.9% #REF! #REF!

30% 43% #REF! 13.0% 9.9% #REF! #REF!

35% 54% #REF! 13.0% 9.9% #REF! #REF!

40% 67% #REF! 13.0% 9.9% #REF! #REF!

45% 82% #REF! 13.0% 9.9% #REF! #REF!

50% 100% #REF! 13.0% 9.9% #REF! #REF!

55% 122% #REF! 13.0% 9.9% #REF! #REF!

60% 150% #REF! 13.0% 9.9% #REF! #REF!

65% 186% #REF! 13.0% 9.9% #REF! #REF!

70% 233% #REF! 13.0% 9.9% #REF! #REF!

Assumptions:
Risk Free Rate (4) 9.00%
Market Risk Premium 6.0%
Sector Risk Premium 0.0%
Statutory Corp. Tax Rate 24.0%

Notes
#REF!
2. Gross Debt = LT debt + ST debt + Preferred Stock
3. Market cap. as of 09-Jul-2008
4. Risk-free rate approximated as equal to the 10-year Czech Republic govt. bond

MORGAN STANLEY
Corporate Bridge Academy (www.educorporatebridge.com)
11-Jul-08
Comparables - Safaricom
Company Ticker Bloomberg Betas

Internet - Tier I

eBay EBAY 1.09

Google GOOG 1.02

Yahoo! YHOO 1.15

Internet - Tier II

Alibaba B28Q94 NA

Baidu BIDU 1.44

Mercadolibre MELI NA

NHN 656039 0.98

Rambler B06GTJ 0.5

Tencent B01CT3 1.29

Classifieds

Dice Holdings DHX NA

Knot KNOT 1.46

Monster MNST 1.65

Rightmove.com B2987V 0.91

Realestate.com.au 619857 0.85

Seloger.com B1HMC7 NA

CEE Media

Agora SA 561831 0.81

Central European Media CETV 1.28

CTC Media CTCM 0.64

Modern Times Group B151P4 0.77

Telefonica O2 527256 0.79

TVN B1LGB1 0.94

poratebridge.com)

Factset Local predicted Beta Factset Global predicted Beta

1.878 1.957

1.588 1.613

1.328 1.371

0.992 1.069

1.378 1.475

1.067 1.15

0.982 1.422

0.949 1.133

1.348 1.36

1.073 1.165

1.469 1.557

1.687 1.776

1 1.194

0.946 1.1

1.316 1.514

0.797 0.892

1.601 1.708

0.975 1.04

0.921 1.417

0.566 0.472

0.792 0.869
 Date 11-Jul-08

Market Cap Gross Debt Cash & Cash Net Debt

Company Ticker TSO (MM) Share Price Net Debt as of Source Short term Debt Long Term Debt Preferred Cap Minority Interest
(lcl) (lcl) Equivalents (lcl)

Internet - Tier I

eBay EBAY 1,316 28 36,850 31-Mar-08 Cap IQ - - - - - 3,988 (3,988)

Google GOOG 314 534 167,466 31-Mar-08 Cap IQ - - - - - 12,135 (12,135)

Yahoo! YHOO 1,346 24 31,736 31-Mar-08 Cap IQ - 583 - 12 595 2,608 (2,013)

Internet - Tier II

Alibaba B28Q94 5,052 10 48,048 31-Mar-08 Cap IQ - - - - - 5,274 (5,274)

Baidu BIDU 34 305 10,432 31-Mar-08 Cap IQ - - - - - 1,666 (1,666)

Mercadolibre MELI 44 30 1,333 31-Mar-08 Cap IQ 4 - - - 4 52 (48)

NHN 656039 48 172,400 8,297,267 31-Dec-07 Cap IQ 4,167 110,165 - 15,825 130,157 356,346 (226,189)

Rambler B06GTJ 15 27 411 31-Dec-07 Cap IQ - - - 7 7 32 (25)

Tencent B01CT3 1,793 66 117,652 31-Mar-08 Cap IQ 292 - - 99 392 3,728 (3,337)

Classifieds

Dice Holdings DHX 62 7 449 31-Mar-08 Cap IQ 1 121 - - 122 78 44

Knot KNOT 32 8 265 31-Mar-08 Cap IQ 0 - - - 0 50 (50)

Monster MNST 121 18 2,170 31-Mar-08 Cap IQ 0 0 - - 0 396 (396)

Rightmove.com B2987V 118 2 263 31-Dec-07 Cap IQ - - - - - 12 (12)

Realestate.com.au 619857 127 4 515 31-Dec-07 Cap IQ 14 1 - 17 32 13 18

Seloger.com B1HMC7 17 13 211 31-Dec-07 Cap IQ 16 53 - - 69 27 42

CEE Media

Agora SA 561831 55 26 1,440 31-Mar-08 Cap IQ 44 96 - - 139 423 (284)

Central European Medi CETV 42 83 3,521 31-Mar-08 Cap IQ 16 1,106 - 24 1,146 594 552

CTC Media CTCM 152 22 3,315 31-Mar-08 Cap IQ - 0 - 48 48 288 (240)

Modern Times Group B151P4 66 308 20,191 31-Mar-08 Cap IQ 873 6 - 207 1,086 399 687

Telefonica O2 527256 322 500 160,884 31-Mar-08 Cap IQ 6,397 2,915 - - 9,312 13,446 (4,134)

TVN B1LGB1 347 16 5,680 31-Dec-07 Cap IQ - 790 - - 790 110 680
 D
e
b
t

c
Gross Financial Net Financial
u
Debt (lcl) Debt (lcl)
r
r
e
n
- (3,988) c
y
- (12,135)

583 (2,025)

- (5,274)

- (1,666)

4 (48)

114,332 (242,015)

- (32)
292 (3,436)

122 44

0 (50)
0 (396)

- (12)

15 2

69 42

139 (284)

1,122 528

0 (288)

879 480

9,312 (4,134)

790 680