Can someone please help me solve the following question:
Brooks Plumbing Products Inc. [BPP] manufactures plumbing xtures 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 rm representing a third company, Garden Specialties Inc. (GSI), that is interested in acquiring BPP. The acquiring rm (GSIJ is a retailer of garden supplies; it sees the potential synergies of the combined rm and is willing to pay BPP shareholders $39 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 PMWTS INC. Selected Financial Information For the Years Ended December 31 2019 Industry 2019 2013 Average Cash $ 79,939,773 $ 3,526,227 Accounts receivable 56,343,465 37,371,771 Inventory 39,735,416 59,960,645 Longlived assets Gross book value 167,343,377 143,343,377 Het book value 100,690,309 95,957,302 Replacement. cost 170,657,409 133,535,333 Liquidation value 63,304,002 67,405,209 Current liabilities 119,115,766 121,072,274 Long-term debt 32,067,364 37,962,302 Shareholders' equity 126,011,333 37,711,369 Capital expenditures 23 ,570,000 13,060,336 Sales 663,234,771 639,476,465 Cost of sales 499,007,733 477,341,001 Operating expense'r 102,737,355 134,335,229 Income tax rate 33% 33% 33.00% Depreciation expense 13,336,493 15,734,254 Dividends 2,320,000 1,320,000 Hearend stock price $ 36 . 43 $ 23 . 69 Number of outstanding shares 26 ,339,554 23,463,554 Sales multiplier 1 .50 Free cash flow multiplier 3.30 Earnings multiplier 13 . 70 Cost of capital 5.9% 5.9% Accounts receivable turnover 6 .20 Inventory turnover 3 . 60 Current ratio 1.50 Quick ratio 1 .20 Cash flowr ratio 1.50 Free cash flow ratio 1.20 Gross margin percentage 32 .0% Return on assets (net book value] 19 .0% Return on equity 29 .0% Earnings per share 5 2 . 30 , *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 ot 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 ow method. assuming that the 2019 amount of free cash flow continues indenitely? 5. Which of the methods would you use? 5. Is the GSI offer a good one? {For requirements 1 to 4, round your answers to the nearest whole dollar amount.) Market value ot equity method $ 962590330 Book value of equity method $ 126,011,339:r Multiples-based method Sales $ 1,002,351157 Multiplesbased method Earnings Multiplesbased method Free cash ow Discounted cash ow method Which of the methods would you use? arket value of equity method
