Brooks Plumbing Products Inc. (BPP) manufactures plumbing fixtures and other home improvement products that are sold in Home Depot and Walmart as well as hardware stores. BPP has a solid reputation for providing value products, good quality, and a good price. The company has been approached by an investment banking firm representing a third company, Garden Specialties Inc. (GSI), that is interested in acquiring BPP. The acquiring firm (GSI) is a retailer of garden supplies; it sees the potential synergies of the combined firm and is willing to pay BPP shareholders $42 cash per share for their stock, which is greater than the current stock price; the stock has traded at about $34 in recent months. Summary financial information about BPP follows.

BROOKS PLUMBING PRODUCTS INC.
Selected Financial Information
For the Years Ended December 31
	2019			2018			2019 Industry Average
Cash	$	80,099,778		$	3,636,227
Accounts receivable		56,958,465			87,492,771
Inventory		39,845,416			60,081,645
Long-lived assets
Gross book value		167,458,377			143,958,377
Net book value		100,800,809			96,067,302
Replacement cost		170,767,409			188,645,338
Liquidation value		68,914,002			67,515,209
Current liabilities		119,225,766			121,193,274
Long-term debt		32,177,364			38,083,302
Shareholders equity		126,121,338			87,821,369
Capital expenditures		23,680,000			13,170,336
Sales		669,334,771			640,576,465
Cost of sales		499,557,788			478,391,001
Operating expense*		102,847,355			134,945,229
Income tax rate		36	%		36	%		36.00	%
Depreciation expense		18,946,493			15,844,254
Dividends		2,930,000			1,430,000
Year-end stock price	$	37.58		$	24.79
Number of outstanding shares		27,489,554			24,563,554
Sales multiplier								1.40
Free cash flow multiplier								8.70
Earnings multiplier								13.50
Cost of capital		5.0	%		5.0	%
Accounts receivable turnover								5.30
Inventory turnover								8.50
Current ratio								1.90
Quick ratio								1.30
Cash flow ratio								1.40
Free cash flow ratio								1.30
Gross margin percentage								35.0	%
Return on assets (net book value)								20.0	%
Return on equity								28.0	%
Earnings per share							$	2.35

*Operating expense includes depreciation expense.

Required: 1. What is the valuation of BPP (for 2019) using the market value method?

2. What is the valuation of BPP (for 2019) using the book value method?

3. What are the valuations of BPP (for 2019) using the multiples-based methods for sales, earnings, and free cash flow?

4. What is the estimated value for BPP using the discounted free cash flow method, assuming that the 2019 amount of free cash flow continues indefinitely?

5. Which of the methods would you use?

6. Is the GSI offer a good one?

(For requirements 1 to 4, round your answers to the nearest whole dollar amount.)