Once you've done the terminal value, we can now move on to discounting. And in this model, and in most models, you'll see people like to see the breakdown of the discounting. And the reason for that is that you can see it on a paper printout or a PDF, and then you can try and reverse engineer the discounting to check it's correct without being able to see the underlying formulas. We're gonna assume that the cash ratios are gradually generated through the year. Every single day. Red Bull will generate some cash as it makes sales. So this means on average the cash flows are received halfway through the year. So we're gonna reflect that in the discounting and we're gonna start with 0.5 as our key metric. And then going forward, we'll take 0.5 and then just add one to it and I'll copy that out.

Then the discount factor. If we think about a discounting equation, if I just write this out, most people will think a present value is equal to a future value divided by 1 plus the discount rate to the power of the year number. However, that formula can be rewritten because the present value is also equal to the future value times 1 divided by 1 plus the discount rate to the power of the air number. And that last piece of this slightly rewritten formula that I'm gonna put in square brackets here is known as the discount factor. And before computers, accountants would actually use discount factor tables to do present values. But in our situation, it's nice to actually see the discount factor because you could try and reverse engineer the discounting to check that the formulas were correct. So we're going to use this end bit of that second formula within square brackets to do our discount factor. So I'll do 1 divided by 1 plus the cost of capital and make sure you absolute reference it. In this model it's given been given a range name, so that's automatically absolute referenced if it's a single cell to the power of the year. And it's a year, but it's really kind of half a year that we're discounting it by and then our hit enter. And that essentially means that each dollar received, in this case on June 30th, 2024, is worth 96.90 cents at the beginning of 2024. So you'll see that percentage decrease over the forecast period and each dollar received on June 30 in 2032 is worth 58.60 cents in today's money. So this allows us then to calculate the present value of the free cash flows by taking our free cash flow at the top, multiplied by the discount factor. And I can copy that, right? So you can see that as the company grows, the free cash flows grow, but actually eventually they're not growing as fast as our WACC calculation. And that means that in prison value terms, the cash flow declines over time. So it kind of rises because the company's growing fast. And then when the growth rate starts to go below the WACC, the present value of the cash flow decreases. So then we can sum up the whole forecast free cash flows, and we get the value of Red Bull during the forecast period, which is about 19.3 billion. Then I'm also going to take my terminal value number. And because I used the Gordon growth model, which is a cashflow methodology, I can just take that and multiply by the discount factor and that will give me the present value of the terminal value. And usually that's at least 60 to 70% of the overall firm value. Obviously, the longer the forecast period, the smaller percentage the terminal value will be, and the shorter the forecast period, the higher the percentage of the overall value, the terminal value will be. Added together these two numbers give us our implied enterprise value. And then once we've got the implied enterprise value, we can then cross the bridge to the implied equity value. So I'm going to add cash and any other financial assets. And we've got some long-term financial assets. So I'm going to go to the balance sheet and the model and I'll pull in the last historical cash balance. And I'll also pull in the financial assets number as well.

So they will increase value because they're excluded from the enterprise value. And then I'm going to deduct the value of the debt and revolver because we are just looking at the equity value here. So I'm gonna go back to the Red Bull forecast model, and on the balance sheet I'll take the revolver number and even though it's zero, it's good practice to take it and I'll add in the long-term debt as well. And so my implied equity value is going to be the enterprise value plus any other financial assets minus any prior claims, which is debt and revolver. And that gives me an implied equity value of 80.2 billion euros. So it's quite good at this point just to do some checking ratios. So I'm gonna compare that to the 2023 EBITDA, multiple EBITDAs before interest. So I must use the enterprise value. So I'll just divide that by the 2023 number and I get about 25 times. And then I've got some forward multiples here. Again, the enterprise value divided by the EBITDA In 2024, and then the enterprise value divided by EBITDA in 2025. And you can see that the multiple is declining, which is what you'd expect. But the key thing to do now is compare that 2023 EBITDA multiple to, the terminal, the implied terminal value multiple. So the implied terminal value multiple is 16.8 times significantly lower than the implied EBITDA multiple for the whole forecast period. And the reason for that is that as growth slows, you would see the multiple contracting. So this really makes sense as an overall concept in the model.