Once we've calculated the cost of capital for Red Bull, we can now actually take the cost of capital and apply it to discounting the free cash flows. First, we need to calculate the free cash flows, and most of the information is gonna come from our three-stament model. You don't need to build a three-statement model to do a DCF, you can just forecast the individual cash flow items and that's a much faster process. But given we have a three statement model, it makes sense to actually reference the key line items on the model. I'm gonna start with the key line items in the historical years, but for the cash flows, I'm only gonna focus on the future years because you'd only get the cash flows in the future. The cash flows historically have already been captured in the cash balance. So the first thing I'm going to do is pull in the key numbers from the three statement model. I'm going to go and get the EBITDA from the Red Bull model in the first historical year. Then I'll pull in the EBIT from the Red Bull model as well, again from the last historical year. And I'm gonna pull in the long term effective tax rate as well. Because I'll need that. And that will be from the assumptions and I'll pull in the effective tax rate there. And then the net operating profit after tax, I can calculate in the historical year. I'm not going to use it for the cash flows, but it's quite a useful benchmark because it means we can do our returns in the historical years too. And the net operating profit after tax is essentially EBIT times 1 minus the long-term effective tax rate. You may find that some bankers when they calculate noad, would prefer to use the marginal tax rate, but I think it's appropriate to use what we call a long-term effective tax rate. It's the average tax rate that the firm's gonna face over time. Now these are my key metrics, so I'm actually gonna copy these across to the end of the forecast period. I wouldn't normally do this, but because I need them for the historical years, unlike the rest of the cash flows, I'm going to do that. So now I'm going to start in the projected year and pull in the key line items from the cashflow statement. In the three statement model, free cash flows is primarily or are primarily capturing the cash flow from operations and the cash flow from investing activities. On the cashflow statement, the key difference is that the cash flow statement starts at net income. And net income is after the interest lines, but our free cash flows and our DCF must start with earnings before the interest lines, but after tax. And that's why we calculate there's almost hypothetical number called net operating profit after tax. And that's the net income the firm would have if it had no interest income and no interest expense. So I can get most of these line items from the cashflow from operations and the cashflow from investing activities. So I'm gonna go back to my three statement model, go down to the cashflow statement, and I'm gonna pull in my depreciation line first.

Then I'm going to get the increase decrease in the operating working capital. Now here there isn't a line in the three statement model for operating working capital. So what I'm going to do is I'm gonna do a sum function, which will just add up all the sections in the cash show from operations related to operating working capital, which is everything from accounts receivable down to accounts payable. And I'll put that in. And then I'm gonna pull in capital expenditure as well. And you may be wondering why I'm not including financial assets, but I don't want to include financial assets in my free cash flows because I have not included interest income. So instead my free cash flows will give me the value of the firm excluding cash and financial assets. So once I've got the enterprise value from the discounted free cash flows, then I can add on cash and financial assets to get my equity value. Obviously deducting debt at the same time. So this means it's pretty straightforward in this model to calculate the free cash flows. And what I'm going to do here is I'm going to copy this across primarily because I want to be able to articulate the development of the ratios below. So I'm gonna copy this across to get our free cashflow forecast.