AMC Data & Assumptions Use the following data to estimate the value of AMC: 2009 $100,000 DATA AMC Balance Sheet At 12/31/2008 and 12/31/2009 Assets: Cash Accounts Receivable Inventory Prepaid expenses Total current assets Gross plant and equipment Accumulated Depreciation Total assets 2008 $89,000 000 112,000 10,000 275,000 238,000 (40,000) $473,000 100,000 10,000 280,000 311,000 (66,000) $525,000 Liabilities and Equity Accounts Payable Accrued liabilities Total current liabilities Mortgage Payable Preferred stock Common stock Retained earnings Total liabilities and equity 2008 $85,000 68,000 153,000 70,000 0 205,000 45,000 $473,000 2009 $90,000 63,000 153,000 0 120,000 205,000 47,000 $525.000 $184,000 60,000 124,000 44,000 26,000 For the Year Ended 12/31/2009 Sales (all credit) Less: cost of goods sold Gross profits Less: operating expenses General and administrative Depreciation Total Operating income Interest expense Earnings before taxes Taxes Preferred stock dividends Net income available to common stockholders 70,000 54,000 4,000 50,000 16,000 10,000 24,000 1. The only entry in the accumulated depreciation account is for 2009 depreciation. 2. Common stock dividends for 2009 22.000 According to the 5-year business plan for AMC Sales are expected to grow at 4% per annum in the next five years. EBITDA Margin% is expected to increase slightly to 45% next year and remain at that level for the following 4 years. Working Capital will stay at 69% of Sales. Capital Expenditures will be 25 million p.a. throughout the 5-year period. Depreciation charges will be equal to Capital Expenditures (i.e. million p.a.). Finally, the corporate tax rate is expected to stay at the current 35%. Assume a WACC of 8% & a final 2% growth of FCFF for the Terminal Value AMC Data & Assumptions Use the following data to estimate the value of AMC: 2009 $100,000 DATA AMC Balance Sheet At 12/31/2008 and 12/31/2009 Assets: Cash Accounts Receivable Inventory Prepaid expenses Total current assets Gross plant and equipment Accumulated Depreciation Total assets 2008 $89,000 000 112,000 10,000 275,000 238,000 (40,000) $473,000 100,000 10,000 280,000 311,000 (66,000) $525,000 Liabilities and Equity Accounts Payable Accrued liabilities Total current liabilities Mortgage Payable Preferred stock Common stock Retained earnings Total liabilities and equity 2008 $85,000 68,000 153,000 70,000 0 205,000 45,000 $473,000 2009 $90,000 63,000 153,000 0 120,000 205,000 47,000 $525.000 $184,000 60,000 124,000 44,000 26,000 For the Year Ended 12/31/2009 Sales (all credit) Less: cost of goods sold Gross profits Less: operating expenses General and administrative Depreciation Total Operating income Interest expense Earnings before taxes Taxes Preferred stock dividends Net income available to common stockholders 70,000 54,000 4,000 50,000 16,000 10,000 24,000 1. The only entry in the accumulated depreciation account is for 2009 depreciation. 2. Common stock dividends for 2009 22.000 According to the 5-year business plan for AMC Sales are expected to grow at 4% per annum in the next five years. EBITDA Margin% is expected to increase slightly to 45% next year and remain at that level for the following 4 years. Working Capital will stay at 69% of Sales. Capital Expenditures will be 25 million p.a. throughout the 5-year period. Depreciation charges will be equal to Capital Expenditures (i.e. million p.a.). Finally, the corporate tax rate is expected to stay at the current 35%. Assume a WACC of 8% & a final 2% growth of FCFF for the Terminal Value
