2. Using the model results from question 1, the CFO believes that in addition to an increase in the sales growth rate and an improving cost position, Life Tech could use its assets more effectively by better managing its receivables and inventory. Specifically, the CFO directs you as a financial analyst to make the following changes to days sales in receivables and days in inventory. On the Target AssumptionsWorksheet, make the following changes and note their impact on Life Tech’s enterprise and equity values on the Valuation Worksheet: (Appendix)

a. Reduce receivables days by 10 days starting in 2014.

b. Reduce inventory days by 10 days starting in 2014.

What is Life Tech’s enterprise and equity value resulting from these changes? How do they compare to the results in question 1? Briefly explain why each of these changes affects firm value. Do not undo the changes you have made to the model.