Question
1.Refer to the following pro forma financial statements for ABC Corp.At the end of 2014 you are valuing ABC Corp. and are calculating a 2018
1.Refer to the following pro forma financial statements for ABC Corp.At the end of 2014 you are valuing ABC Corp. and are calculating a 2018 terminal value based on a liquidation scenario.What would the terminal value be in present value (2014) terms?Assume that the resale value of PP&E is 500 and that the appropriate discount rate is 10%.
Income statement
Selected balance sheet items
2018
2017
2018
Sales
2000
Current assets
500
550
COGS
1650
PP&E (Net)
250
300
Operating expenses
200
Depreciation
50
Current liabilities
370
350
Interest expense
50
Earnings before taxes
50
Tax
10
Net income
40
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Quantitative Investment Analysis
Authors: Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, David E. Runkle
3rd edition
111910422X, 978-1119104544, 1119104548, 978-1119104223
