4) Corporation Valuation

Use the following data to calculate MicroDrives Horizon Value, Value of Operations, and Estimated intrinsic Stock Price given below in figure 12-3(image). Show all calculations on a separate sheet of paper.

Figure 12-1
MicroDrives Most Recent Financial Statements (Millions, Except for Per Share Data)
INCOME STATEMENTS			BALANCE SHEETS
	2012	2013	Assets		2012	2013
Net sales	$ 4,760	$ 5,000	Cash		$ 60	$ 50
COGS (excl. depr.)	3,560	3,800	ST Investments		40	-
Depreciation	170	200	Accounts receivable		380	500
Other operating expenses	480	500	Inventories		820	1,000
EBIT	$ 550	$ 500	Total CA		$ 1,300	$ 1,550
Interest expense	100	120	Net PP&E		1,700	2,000
Pre-tax earnings	$ 450	$ 380	Total assets		$ 3,000	$ 3,550
Taxes (40%)	180	152
NI before pref. div.	$ 270	$ 228	Liabilities and equity
Preferred div.	8	8	Accounts payable		$ 190	$ 200
Net income	$ 262	$ 220	Accruals		280	300
			Notes payable		130	280
Other Data			Total CL		$ 600	$ 780
Common dividends	$48	$50	Long-term bonds		1,000	1,200
Addition to RE	$214	$170	Total liabilities		$ 1,600	$ 1,980
Tax rate	40%	40%	Preferred stock		100	100
Shares of common stock	50	50	Common stock		500	500
Earnings per share	$5.24	$4.40	Retained earnings		800	970
Dividends per share	$0.96	$1.00	Total common equity		$ 1,300	$ 1,470
Price per share	$40.00	$27.00	Total liabs. & equity		$ 3,000	$ 3,550
Figure 12-1
MicroDrives Most Recent Financial Statements (Millions, Except for Per Share Data)
INCOME STATEMENTS			BALANCE SHEETS
	2012	2013	Assets		2012	2013
Net sales	$ 4,760	$ 5,000	Cash		$ 60	$ 50
COGS (excl. depr.)	3,560	3,800	ST Investments		40	-
Depreciation	170	200	Accounts receivable		380	500
Other operating expenses	480	500	Inventories		820	1,000
EBIT	$ 550	$ 500	Total CA		$ 1,300	$ 1,550
Interest expense	100	120	Net PP&E		1,700	2,000
Pre-tax earnings	$ 450	$ 380	Total assets		$ 3,000	$ 3,550
Taxes (40%)	180	152
NI before pref. div.	$ 270	$ 228	Liabilities and equity
Preferred div.	8	8	Accounts payable		$ 190	$ 200
Net income	$ 262	$ 220	Accruals		280	300
			Notes payable		130	280
Other Data			Total CL		$ 600	$ 780
Common dividends	$48	$50	Long-term bonds		1,000	1,200
Addition to RE	$214	$170	Total liabilities		$ 1,600	$ 1,980
Tax rate	40%	40%	Preferred stock		100	100
Shares of common stock	50	50	Common stock		500	500
Earnings per share	$5.24	$4.40	Retained earnings		800	970
Dividends per share	$0.96	$1.00	Total common equity		$ 1,300	$ 1,470
Price per share	$40.00	$27.00	Total liabs. & equity		$ 3,000	$ 3,550

Use the following data calculate MicroDrive's Horizon value, value of operations, and Estimated Stock price. Show all calculations on a separate sheet of paper