2. Xstar Corporations cost of capital is 5.65%. Income statements of the Xstar for 2018 and 2019 are given below:

	2018	2019
NET SALES	5,026	7,622
Cost of sales and operating expenses	1,726	2,422
Depreciation	420	560
EBIT
Interest expense	620	75
EBT
Taxes	850	876
NET INCOME

For the corresponding multiples, which are provided in table below, calculate the intrinsic value of the firm in 2019. If the price offered is $42,000, which will be paid after 4 years, what would be your recommendation in this deal for the seller? Show each step in your calculations (40 MARKS)

	Revenue	EBIT	Net Income
Multiple Values for 2016	5.54	8.21	6.58