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Oracle Corporation
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== Sensitivity Analysis == [[File:Screenshot 2023-08-23 1.jpg|thumb|354x354px|Table 1]] Sensitivity analysis provides valuable insights into the potential outcomes and risks associated with models which are based on a wide range of assumptions. As such, it is crucial to be implemented for models, such as the DCF. Two significant variables that have an important impact in our DCF valuation were revenue growth rate and WACC. As it is widely known, when the WACC increases, the valuation decreases as they are negatively related based on the NPV formula. For example, in the first table, when the WACC increases by only 0.5%, the intrinsic value per share falls by approximately $17. If we increase it by another 0.5%, the intrinsic value per share drops to $100.61. Revenue growth is an essential part of the valuation as well, since it significantly impacts the free cash flow of Oracle. Under our bearish case (revenue growth rate equals 6%), Oracle's share is worth $115.81, whereas under our bullish case (revenue growth rate equals 10%) Oracle's share is worth $148.31. [[File:Screenshot 2023-08-23 2.jpg|thumb|355x355px|Table 2]] The second table includes another variable that can potentially alter our valuation result a lot, which is the perpetual growth rate. Here, under our base case, the company is expected to grow by 3% in perpetuity. This figure is most of the times tied up with the global GPD growth. However, it is worth noting that a perpetually growing economy is an idealized assumption and may not reflect the reality of economic cycles and fluctuations.
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