18.1 You plan to start a business to produce and sell custom kitchen cabinets. The targeted price for each order of cabinets is $10,000. You estimate that you will receive orders for cabinets for eight kitchens in each of the first two months, nine kitchens in the third month, and ten kitchens in the fourth month. The cost of the equipment necessary to produce the cabinets is $105,000. You expect the cost of raw materials to be $3,000 per order. In addition, you expect monthly gross wages and payroll to be $27,000 rent to be $8,000, and other expenses to total $4,000. You also expect advertising costs to be $10,000 at the beginning of the second month, but to remain constant at $1,000 per month during the following three months. How much will you have to initially invest ensure that you have a cash balance of $10,000 at the beginning of the second month? If you invest this amount, what will be your cash balance at the end of the fourth month?

18.2 Which of the following is/are usually included in an entrepreneur's business plan? a) Detailed description of the company's products and services. b) Discussion of the management team, including organizational structure. c) A listing of the types of securities that have been issued and who owns them d) A market analysis e) All of the above are typically included in a business plan.

18.3 Sessler Corporation is a private company that had EBIT of $186 million and depreciation and amortization of $22 million in the most recent fiscal year. At the end of that year, a similar public firm has an Enterprise Value/EBITDA multiple of 4.3. What is the implied enterprise value of Sessler?

18.4 Winter Inc. management estimates that the company will generate after-tax free cash flows from the firm (FCFF) of $12.5 million, $16.8 million and $19.7 million, respectively over the next three years. After that, FCFF are expected to grow at a constant five percent per year forever. The company has $5 million in non-operational assets. If the appropriate WACC is 8 percent what is the enterprise value of this business.

18.5 Do private companies have audited financial statements prepared in accordance with GAAP?