2018 1,000,000 1,100,000 1,210,000 P5-6. You are the management accountant of Cheesecake and Pearl Company. You were tasked to make an internal projection for the valuation exercise of the company. 2019 2017 2020 Volume 605,000 Revenues 5,000,000 5,500,000 6,050,000 3,025,000 Cost of Goods Sold 3,000,000 3,150,000 3,315,000 2,407,500 Variable 1,500,000 1,650,000 1,815,000 907,500 Fixed 1,500,000 1,500,000 1,500,000 1,500,000 Gross Profit 2,000,000 2,350,000 2,735,000 617,500 Operating Expenses 900,000 950,000 1,005,000 702,500 Variable 500,000 550,000 605,000 302,500 Fixed 400,000 400,000 400,000 400,000 Operating Income 1,100,000 1,400,000 1,730,000 (85,000) Management directed that the future trajectory of the business will be based on its historical revenue performance with the exclusion of 2020 as it is an unusual year because of pandemic. Management assumes that it can achieve the same level of sales growth pre-pandemic from 2021 onwards with 2020 as its base year Variable and fixed COGS and operating expenses will exhibit the same behavior as historical results. 60% of fixed COGS are related to depreciation while 30% of fixed operating expenses are related to depreciation. Capital investment is estimated to be infused yearly at P500,000. Net cash flow is estimated to grow by 5% after the initial 5-yr forecast period. Cost of capital for Cheesecake and Pearl Company is at 8%. Corporate income tax rate is imposed at 25%. Outstanding loans at end of 2020 is at P5,000,000 Requirements: 1. What is the compounded annual growth rate for revenues for 2017 to 2020? 2. What is the compounded annual growth rate for revenues for 2017 to 2019? 3. What is the growth rate that will be used in the forecast preparation? 149 Scarved with CanScanner VALUATION CONCEPTS AND METHODOLOGIES 4. What is the projected net income from 2021 to 20257 5. What is the net cash flows from 2021 to 2025? 7. What is the equity value of Cheesecake and Pearl Company? 6. What is the enterprise value of Cheesecake and Pearl Company