A. Which of the following is a step in the DCF method of valuation?

Converting the balance sheet to a common sized statement.

Forecasting the net income for each year (for some number of years).

Filling out a form K-1.

Forecasting the operating cash flow for each year (for some number of years).

B. Using the DCF method, calculate the value of the following company.

Cash Flows:

Year 1: $50,000

Year 2: $40,000

Year 3: $61,000

Year 4: $75,000

Discount rate = 28%.

C. Compute the value of the following company using the DCF method.

Cash Flows:

Year 1: $100,000

Year 2: $125,000

Year 3: $150,000

Year 4: $175,000

Use a discount rate of 24%.