1. ABC company has 2 million shares outstanding. Below are the forecasted sales and expenditures for the next five years: 3 4 5 Year 0 1 2 Sales and investments forecast ( millions): Sales 120 130 136 Gross fixed assets 104 120 Depreciation 15.6 17 147 168 90 134 18.6 158 147 19.2 162 19.5 The ABC costs of goods sold, other costs, and the net working capital requirement are expected to be 70%, 15%, and 10% of sales over the years, respectively. Profits are subject to a tax rate of 30%. v. Explain when and why you should use one of the following three valuation methods to value a firm: adjusted present value (APV), flow to equity (FTE), and WACC. (300 words limit) (30 marks) (Total 100 marks) 1. ABC company has 2 million shares outstanding. Below are the forecasted sales and expenditures for the next five years: 3 4 5 Year 0 1 2 Sales and investments forecast ( millions): Sales 120 130 136 Gross fixed assets 104 120 Depreciation 15.6 17 147 168 90 134 18.6 158 147 19.2 162 19.5 The ABC costs of goods sold, other costs, and the net working capital requirement are expected to be 70%, 15%, and 10% of sales over the years, respectively. Profits are subject to a tax rate of 30%. v. Explain when and why you should use one of the following three valuation methods to value a firm: adjusted present value (APV), flow to equity (FTE), and WACC. (300 words limit) (30 marks) (Total 100 marks)