before-tax cost of debt is 5.19%, after-tax cost of debt is 4.1%, cost of equity capital is 20.28%.

Q1: Develop the inputs that will be used to estimate the value of Amcor (AMC.AX). Specifically:

Construct pro-forma balance sheet and income statement. The key in this task is to justify with evidence the assumptions imposed on other key input variables including COGS, operating expense, CAPEX, depreciation, net working capital and tax.

Justify the “plug” method used to complete the pro-forma balance sheet.

Use the information in pro-forma statements to derive cash flows that can be used in a Discounted Cash Flow based valuation of the company.

(iv) Estimate weighted average cost of capital.

Q2: Value the company and make a recommendation

Estimate the intrinsic value of Amcor (AMC.AX) based on the pro-forma constructed in previous questions. Make a recommendation for stock investors from the following relative to the company’s share price as of 1 September 2024:

(a) Strong buy

(b) Buy

(c) Hold

(d) Underperform

(e) Sell