A finished ACC-486 Topic 8 valuation sensitivity table example, valuing a company from forecast cash flows and showing how far the answer moves across plausible discount and growth rates. Searches like "acc 486 topic 8 assignment example", "acc486 topic 8 sample" and "acc-486 topic 8 example" land here.
What a finished ACC-486 Topic 8 valuation sensitivity table looks like
The finished example values a packaging manufacturer from five years of forecast free cash flow rising from $20 million to $26 million, all figures illustrative. At a 9 percent discount rate those flows are worth $90.0 million today. A terminal value at 2.5 percent long-term growth adds $266.5 million in present value, so enterprise value is $356.5 million and three quarters of it rests on years beyond the forecast. Subtracting $60 million of net debt and dividing by 10 million shares gives $29.65. The grid follows, discount rates from 8 to 10 percent down the side and growth from 1.5 to 3.5 percent across the top. Over those equal two-point spans, the discount rate moves the value by $11.41 a share and growth by $8.93, and the narrative says which input the conclusion therefore depends on.
How an ACC-486 Topic 8 example is structured
The valuation is laid out so the base case, the grid and the reading can each be checked separately. It opens with the five forecast years of free cash flow, carried from operating cash flow less capital spending, with the source of each figure noted. The discount rate comes next, a stated cost of capital with its components listed and labeled as illustrative. The base-case calculation follows: each year's flow discounted, the terminal value computed with the growth formula and discounted from year five, and the bridge from enterprise value to value per share through net debt and share count. The sensitivity grid is the fourth part, twenty-five cells with the base case highlighted. A fifth part reports the terminal value's share of the total and explains why that share makes the growth and discount assumptions dominant. The closing paragraph states a range to carry away, not a price.
Free cash flow from the forecast
Each forecast year's free cash flow is carried from operating cash flow less capital spending, so the valuation inherits assumptions the reader can already inspect.
Terminal value's share stated plainly
About three quarters of enterprise value comes from years after the forecast, a fact the example states outright because that share explains why two inputs dominate.
A five by five grid
Discount rates run down the side and long-term growth across the top, with the base case marked, so any combination of the two can be read directly.
Equal spans compared across inputs
Varying each input across a two-point range shows the discount rate moving value by $11.41 a share, against $8.93 for long-term growth.
A range carried into the conclusion
The closing paragraph reports the plausible band of values and the input that governs it, rather than presenting $29.65 as though it were precise.
Where marks go in ACC-486 Topic 8
Valuations here are marked on what they admit about their own precision. A single value per share, computed carefully and reported to the cent with no sensitivity, presents an estimate as a measurement and forfeits the credit the grid carries. Grids that vary an input nobody doubts, such as the tax rate, while holding the discount rate fixed, test the wrong assumption. Terminal values calculated with a growth rate above the discount rate, or close to it, produce figures that swamp everything else, and markers check for that. Papers that never state how much of the value sits beyond the forecast leave the reader unaware that most of the answer rests on one formula. The final loss is a conclusion framed as a recommendation to buy, which reads as investment advice; the example states a range and its driver instead.
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ACC-486 Topic 8 questions, answered
Why does the terminal value dominate?
Because it stands for every year after the explicit forecast, often decades of cash flow compressed into one number. In the example it supplies about three quarters of enterprise value. That makes the long-term growth rate and the discount rate, the two inputs in the terminal formula, far more influential than any single forecast year, which is exactly what the sensitivity grid is designed to reveal.
Which inputs belong in a sensitivity table?
The ones that are both uncertain and influential. The discount rate and long-term growth usually qualify, since small changes in either move the terminal value heavily. Operating inputs such as margin or revenue growth can be tested instead where the forecast is most doubtful about them. Varying an input that is well established, or one that barely moves the answer, adds cells without adding information.
Is the valuation a recommendation to buy the shares?
No. The example is coursework analysis, and it reports a range of values under stated assumptions together with the input that range depends on most. Comparing that range with a market price can be part of the discussion if the assignment asks for it, but a recommendation to buy or sell goes beyond what the exercise supports and is left out.