All the formulas are built into the excel file so when you go over a cell, you can track how the calculation for each number on the sheet is done. Pay special attention to the financial ratios, growth assumptions, calculation of the free cash flows for the foreseeable future (5 years) and the calculation of the terminal value. These future free cash flows are then discounted back to time zero using the discount rate (WACC). Once you feel comfortable on the model and the solutions to the case, I want you to answer the following questions to complete your project assignment: Using the provided financial statements as a starting point: The DCF valuation and pro forma financials with five years of forecasted growth rates are provided in the original model. Please modify the model to consider a more successful scenario where Wok Yows sales grow at a more aggressive pace of 40% for five years and then flatten to a more sustainable growth rate of 7%. What would the stock value per share be under the new scenario? What kind of strategic changes you would make in the business model to justify the growth assumption? How would you do things differently? You can use fictional events to justify your assumptions. Prepare and present DCF valuations and pro forma financial statements (five-year explicit period) that justify a $31 and a $56 share price. You can play with the model assumptions to get to these valuations. Propose two different business plans that would be targeting these two different outcomes. Make sure the ratios embedded in your projections conform to reasonable operating ratio assumptions in the models. Also remember that higher risk business strategies come with higher expected returns. Discuss the $31 and $56 IPO prices for Wok Yow within the context of comparable firms and their multiples. You can use some outside reference materials from companies in similar industries for comparison purposes. Then take a position on whether you would recommend the $31 or $56 IPO. Which one is more feasible? Take a position on which of the two business plans you would invest in as an investor, which financial instrument of the company you would want to invest in and what kind of a return you would expect on your money. Prepare an executive summary discussing the events and decisions leading to its current situation, the options it currently has moving forward, and your recommendations for Wok Yows near future. The events in the summary will be fictional.

WOK YOW IMPORTS, INC.
Enterprise (Entity) Valuation Solution [Parts A through G]:
Chapter 14 Mini Case			Percent Change in Net Sales						Percent Change in Net Sales
	% of		42.9%	150.0%	20.0%	16.7%	6.0%			42.9%	150.0%	20.0%	16.7%
[Thousands of Dollars]	2016	Actual	Pro forma --------------------------------------------						Percent of Net Sales
NOPAT Statements	Sales	2016	2017	2018	2019	2020	2021		2016	2017	2018	2019	2020
Net Sales	100.0%	70.0	100.0	250.0	300.0	350.0	371.0		100.0%	100.0%	100.0%	100.0%	100.0%
Cost of Goods Sold	-50.0%	-35.0	-50.0	-125.0	-150.0	-175.0	-185.5		-50.0%	-50.0%	-50.0%	-50.0%	-50.0%
Gross Profit	50.0%	35.0	50.0	125.0	150.0	175.0	185.5		50.0%	50.0%	50.0%	50.0%	50.0%
SG&A Expenses	-20.0%	-14.0	-20.0	-50.0	-60.0	-70.0	-74.2		-20.0%	-20.0%	-20.0%	-20.0%	-20.0%
Depreciation	-5.0%	-3.5	-5.0	-12.5	-15.0	-17.5	-18.6		-5.0%	-5.0%	-5.0%	-5.0%	-5.0%
EBIT	25.0%	17.5	25.0	62.5	75.0	87.5	92.8		25.0%	25.0%	25.0%	25.0%	25.0%
Interest	0.0%	0.0	0.0	0.0	0.0	0.0	0.0		0.0%	0.0%	0.0%	0.0%	0.0%
EBT	25.0%	17.5	25.0	62.5	75.0	87.5	92.8		25.0%	25.0%	25.0%	25.0%	25.0%
Taxes (40% rate)	-10.0%	-7.0	-10.0	-25.0	-30.0	-35.0	-37.1		-10.0%	-10.0%	-10.0%	-10.0%	-10.0%
NOPAT	15.0%	10.5	15.0	37.5	45.0	52.5	55.7		15.0%	15.0%	15.0%	15.0%	15.0%
Required Net Working Capital:
Req Cash+Receivables+Inventories	33.3%	23.3	33.3	83.3	100.0	116.7	123.7
Minus: Payables+Accruals	-16.7%	-11.7	-16.7	-41.7	-50.0	-58.3	-61.8
Req Net Working Capital (RNWC)		11.7	16.7	41.7	50.0	58.3	61.8
Increase in RNWC			5.0	25.0	8.3	8.3	3.5
Fixed Assets Schedule:
Net Fixed Assets (NFA)	33.3%	23.3	33.3	83.3	100.0	116.7	123.7
Increase in NFA			10.0	50.0	16.7	16.7	7.0
Plus: Depreciation			5.0	12.5	15.0	17.5	18.6
CAPEX			15.0	62.5	31.7	34.2	25.5
Free Cash Flows to Entity:
NOPAT			15.0	37.5	45.0	52.5	55.7
Plus: Depreciation			5.0	12.5	15.0	17.5	18.6
Minus: CAPEX			-15.0	-62.5	-31.7	-34.2	-25.5
Minus: Increase in NWC			-5.0	-25.0	-8.3	-8.3	-3.5
Operating Free Cash Flows			0.0	-37.5	20.0	27.5	45.2
Terminal Value CF (r =.18, g =.06)						376.3
Total Free Cash Flows (TFCF)			0.0	-37.5	20.0	403.8
PV of TFCF (18% Discount Rate)		$193.5
Less: LTD Value		$30.0
Equity Value		$163.5
Value Per Share (10,000 shares)		$16.35
Business plan: