Brooks Plumbing Products Incorporated (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 Incorporated (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 $38 cash per share for their stock, which is greater than the current stock price; the stock has traded at about $35 in recent months. Summary financial information about BPP follows.

BROOKS PLUMBING PRODUCTS INCORPORATED
Selected Financial Information
For the Years Ended December 31
	2022	2021	2022 Industry Average
Cash	$ 80,039,778	$ 3,576,227
Accounts receivable	56,898,465	87,426,771
Inventory	39,785,416	60,015,645
Long-lived assets
Gross book value	167,398,377	143,898,377
Net book value	100,740,809	96,007,302
Replacement cost	170,707,409	188,585,338
Liquidation value	68,854,002	67,455,209
Current liabilities	119,165,766	121,127,274
Long-term debt	32,117,364	38,017,302
Shareholders equity	126,061,338	87,761,369
Capital expenditures	23,620,000	13,110,336
Sales	668,734,771	639,976,465
Cost of sales	499,257,788	478,091,001
Operating expense*	102,787,355	134,885,229
Income tax rate	38%	38%	38.00%
Depreciation expense	18,886,493	15,784,254
Dividends	2,870,000	1,370,000
Year-end stock price	$ 36.98	$ 24.19
Number of outstanding shares	26,889,554	23,963,554
Sales multiplier			1.50
Free cash flow multiplier			8.70
Earnings multiplier			13.20
Cost of capital	6.4%	6.4%
Accounts receivable turnover			6.70
Inventory turnover			8.50
Current ratio			1.70
Quick ratio			1.10
Cash flow ratio			1.50
Free cash flow ratio			1.10
Gross margin percentage			33.0%
Return on assets (net book value)			20.0%
Return on equity			29.0%
Earnings per share			$ 2.32

*Operating expense includes depreciation expense.

Required: 1. What is the valuation of BPP (for 2022) using the market value method?

2. What is the valuation of BPP (for 2022) using the book value method?

3. What are the valuations of BPP (for 2022) 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 2022 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, Intermediate calculations should be rounded, round your answers to the nearest whole dollar amount.)