978-0073526898 Case Sirius Q17 Part 3

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Model Summary Sensitivity Analysis

Historical Data For: Forecast Horizon 10 Years

SIRIUS SATELLITE RADIO

Most Recent Fiscal Year End: 12/31/2005

This Year’s ROE (%) -167.62%

Average ROE (last five years) -695.11%

Sales Growth (last five years) #DIV/0!

Terminal Year’s ROE (%) 85.57%

Forecast Data: This Year’s Sales Growth (%) 159.00%

Forecast Horizon 5 Years

This Year’s ROE -167.62%

Terminal Year’s Sales Growth (%) 5.00%

Terminal Year’s ROE 85.57%

Cost of Equity Capital (%) 10.00%

Terminal Year’s Sales Growth 5.00%

This Year’s Forecast EPS -$0.65

Estimated Price/Share $724.56

Cost of Equity Capital 10.00% assumptions on the estimated price per share. Note that the sensitivity

Valuation Date 6/1/2006 analysis uses a linear smoothing algorithm to compute ROE and Sales

Estimated Price/Share

$2.13 Growth between the current year and the terminal year, so it may

Estimated Price/Earnings Ratio -3.29 provide a different price estimate from your detailed analysis even

Estimated Market/Book Ratio 8.81 with the same key forecasting assumptions.

Quick ‘n’ Dirty Computations

5 Years 1 2 3 4 5 6 7 8 9

ROE -167.62% -116.98% -66.34% -15.70% 34.93% 85.57% 85.57% 85.57% 85.57%

Growth 159.00% 128.20% 97.40% 66.60% 35.80% 5.00% 5.00% 5.00% 5.00%

Lagged BV 324968 841667 1920684 3791431 6316524 8577840 9006731 9457068 9929921

Earnings -977732 -1615681 -1894754 -793702 2601492 7523529 7899705 8294691 8709425

Residual Income -1010229 -1699848 -2086823 -1172845 1969840 6665745 6999032 7348984 7716433

PV Residual Income -918390 -1404833 -1567861 -801069 1223116 3762639 3591610 3428355 3272521

PV Term. Residual Income 41196895

PV 20Y Residual Income 38112133

PV Residual Income 79309028

Equity Value 79633996

Equity Value at Current Date 87122910

Less Contingent Claims 0

Adjusted Value 87122910

Price/Share 64.71636603

10 Years 1 2 3 4 5 6 7 8 9

ROE -167.62% -142.30% -116.98% -91.66% -66.34% -41.02% -15.70% 9.61% 34.93%

Growth 159.00% 143.60% 128.20% 112.80% 97.40% 82.00% 66.60% 51.20% 35.80%

Lagged BV 324968 841667 2050301 4678787 9956459 19654050 35770371 59593438 90105279

PV Residual Income 891253613

Equity Value 891578581

Equity Value at Current Date 975424117

Less Contingent Claims 0

Adjusted Value 975424117

Shares Out. 1,346,227

Growth 159.00% 151.30% 143.60% 135.90% 128.20% 120.50% 112.80% 105.10% 97.40%

Lagged BV 324968 841667 2115109 5152407 12154527 27736631 61159272 ######## ########

Earnings -977732 -2290859 -5170737 ######## ######## ######## ######## ######## ########

Residual Income -1010229 -2375025 -5382248 ######## ######## ######## ######## ######## ########

PV Residual Income -918390 -1962831 -4043762 -8014082 ######## ######## ######## ######## ########

PV Term. Residual Income 99318879944

PV 20Y Residual Income 8873592826

Equity Value 108192797739

Equity Value at Current Date 118367428760

Less Contingent Claims 0

Adjusted Value 118367428760

Shares Out. 1,346,227

Price/Share 87925.32155

10 11 12 13 14 15 16 17 18 19 20 21 22

85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57%

5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%

10426418 10947738 11495125 12069882 12673376 13307044 13972397 14671017 15404567 16174796 16983536 17832712 18724348

9144897 9602141 10082248 10586361 11115679 11671463 12255036 12867788 13511177 14186736 14896073 15640877 16422920

8102255 8507368 8932736 9379373 9848341 10340758 10857796 11400686 11970720 12569257 13197719 13857605 14550486

3123770 2981780 2846245 2716870 2593376 2475495 2362973 2255565 2153039 2055174 1961757 1872586 1787469

10 11 12 13 14 15 16 17 18 19 20 21 22

60.25% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57% 85.57%

20.40% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%

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81245014 ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ########

69008717 ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ######## ########

26605848 40126173 38302256 36561244 34899369 33313034 31798806 30353405 28973705 27656719 26399595 25199613 24054176

10 11 12 13 14 15 16 17 18 19 20 21 22

-53.68% -41.02% -28.36% -15.70% -3.05% 9.61% 22.27% 34.93% 47.59% 60.25% 72.91% 85.57% 85.57%

89.70% 82.00% 74.30% 66.60% 58.90% 51.20% 43.50% 35.80% 28.10% 20.40% 12.70% 5.00% 5.00%

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