Career Life Chegg Home Study tools My courses My books Question: When Ryan Bang concocted his cleaning compour When Ryan Bang concocted his cleaning compound, some twenty years ago, il that his wife, and be were trying to do was to come up with a sweetergente yet tougher, cleaning product Little did he realure that someday he would be the proud owner of a milion dollar fim debating whether or not to sell stock to the public After having peddled acuum Cleaners and floor wax products at state fairs and trade shows throughout the Midwest, Ryan and Realed that there was a dire need for a cearing and polishing product that was free from harsh chemicals, environmentally friendly, and tough on dirt and grime. So Ryan spent man hours in his garage at the country home experimenting with various leansing agents, and extracts until he finally came up with what he proudly calle Bang The perfect cleaner and polis made from the pet of Valencia oranges. Not only was the mature sweet smeling, it was an effective solvent and degreaser which worked wonders on their latchen cabinets at home So spurred on by their close friends, the family formed the own company-Bangl Cleaning Supplies Inc. Later with the help of their children, Deana, Dan and Dave, they used direct response television direct mail, and e-commerce channels to help grow the company at a phenomenal rate. When the Home Shopping Network agreed to let them show of the merchandise about 5 years ago, major retailers Wil Mart and Costco took notice and started stocking their product on their shelves Wirin twenty years, there had grown to over 500 million and their production facilities were beginning to feel the strain. Their product line hadded toidude air fresheners soap bars, liquid soaps, tot removes and a variety of deaning tool Thought this success, the family always focused on customer need and satisfaction was encouraging the customers to provide them with feedback and testimonials. Their latest addition, an increase and wood protector, seemed to be gaining wide optance both in the United States and Ryan, who wants nearing 75 years of age, new that they would need to raise significant amounts of capital they wanted to be growing and expanding the product the Stat actively involved in the business, he had asked the rest of his family for their suggestions regarding the possibility of going public byssuing an Initial public offering IPO Dean andere strong sported the idea because they felt that with competitors coming up with subtroducts. They need to stay ahead of the game. Dar on the other hand agreed and recommended that they groduction and concentrate on the ting forts. He preferred that the firmay things on external capital and Puting control Athey weighing at the factors, jan decided to the bit of ang the money vaan BE 2 3 5 6 Q W E R T Z . S F G H Chegg Home Study tools My courses My books Career Life hech weighing at the factors decided to the puby framing the money in IPO Dar Dar Dave. He said he wee of you to the most prestigious business school in the country Northwood University obvious to depend totally on the investment Banking festa come up with the right pro Why don't you put your heads together and figure out what is the minimum price that we should all our stock foto go public say we 30 milion sham sure we can find a way of retaining control of abortion of the shareholding and w the much-needed cash Dan's point of loss of control is a good but I am not in favor of Outsourcing production. Our success has come from our and would be diedit we the produce the product SeDen Dan, and Dave got to work. They at they would need industry and competitors franca data que presente in data for three of the public traded competition in the person and household products Industry sector and present the company's post your ncome statements and balance sheets respectively Deana preferred to the Corporate Model why there wastimated as the sum of s discounted free cash flow cash flows wered by stracting the first capital Investment from the year's iet operating profits are NOPAT) and were discounted at a stable risk ated discount weighted average cost of captured that the firm's true cash flows would grow at 20% during the first year during the second year, and finally settle down to a long-term growth rate of others. The mosted by subtracting out the firm's outstanding debt owed to creditors from the Dead aree rate of mult premium and the rage bea of the competitors when determining the firm's cost of equity. It should be noted that the company's stated to going forward Having worked on various valuation projects for coming from Dar was a strong advocate of the of multiples models for valuing common stock moddingsbrice-coming pricepricebook and price cash flow multiples comunion with forecasted values for the Firm's caring a book values, and a fost and the dyerve compounded growth rate when forecasting themes and the courted the year ahead price forecasts by Deed rate frumonegutsed on the Caring Modeling the same inputs that Dana Dave's old finance professor, D Dennis When had had indoctrinated him in the art common stock on the counting future dividendes uredate of retum and various growth in conjunctionary bemark whenvaluing growth comes was Witherspoons According we decide votlegrowth rate model to value the firm with growth of former food by 20 for the two years, and a long term growth. The company's most recent A 5 E R z S D G Chegg Home Study tools My courses My books Dawsold finance professor Dr. Dennis Witherspoon on the other hand had indoctrinated him in the art of common stock in the counting of future idends. Always use a realistic required rate of return and various growth rate scenarios in conjunction with industry benchmarks, when aluing growth wa Dr Witherspoon's advice. According Dave decided to use a variable growth rate model to value the firm's equity with growth smotions of 30% for the first three years, followed by 20% for the no two years, and a long-term growth mumption of others. The company's most recent dividend was $125 per share What wil we do our three estimates are totally naked Deanabolding rather concerned "Wet have to go back to the drawing table and examine on said the ever resourceful Dan "We'll each have to be within a reasonable bolark or Dad going to fil Figure 1 Key Valuation Ratios for Top 3 Competitors Company Company Company Price Earings 23.6 26 228 Price / Book 121 42 Price Sales 29 23 29 PriceChow 12 16 147 Dividend Yield 2 15 17 Beta 12 Mecent Price 56247 $5229 $573 Figure 2 Income Statements Ka-Boom Cleaning Supplies, Inc. 2 3 # to 5 6 W E R. Z S G Figure 2 Income Statements Ka-Boomleaning Supplies, Inc. 2014 2015 2016 2017 2018 Revenue 100 100.000 225.000.000 300.250.000 400.150.000 500.000,000 COGS (45.315.000 100.000.000 1547122.50010134.068,000 255.000.000) Groston 56785.000 2000.000 15.500 216.083.000 245.000.000 Depreciation 3.062565 0.600,000 206.746) 01.042.540) 19.703125 Operating Expenses BLOG 72.000.000 37072.500 1141653.100) 140,000,000) Earnings Before it 10.193.35 41.400.000 254 7285.250 95.296.875 nost Expense 11743,025 2760.000 LES 3.165.7601 (B0062501 Earning for 16.249.29 3600.000 50.97289 22219-500 290.625 Income Tom 09.127.26 52.000 20. 22776.95 130 551,719 Nathome 25116000 403 10.4.6.75 56.738.905 Figure Balance Sheets Bol Cleaning Supplies Inc 3 5 6 7 Q W E R . Z S D E G H T V Net Income 7422054 25.116.000 BOB 40.642.675 58.738.906 Figure Balance Sheets Boom Cleaning Supplies, Inc. 2014 2015 2016 2017 2018 Current Assets 25.049,832 29.000.000 45.573.081 57,631600 64,687,500 Fixed Assets 30,636462 3.000.000 42.067.499 70.426,400 97,031250 Total Assets 56666 2947.000.000 87.640 540 129,048.000 161778.750 Current Liabilities 4229.601 4600.000 2.128.108 8,609,600 13,343.750 Long Term Debt 15% per year 26, 336,694 18.400.000 12.512432 34,438,400 53,375.000 Owners Equity 28.000.000 52.000.000 72.000.000 85.000.000 95,000,000 Total Cables & Owners' Equity 55.666,295.000.000 1540.54028048.000 161718.750 Based on Dean's preference for the Corporate Value Moon what would the company's selling price per sharebe if they were to 30 million shares? Expert Answer 2 3 5 W E R . Z Z N . S F G H Y X c 2. Comment on Kelly's preference of the corporate value model. Based on her approach, what would Orange Brite's selling price per share be if they were to issue 30 million shares? The Corporate Value Model that chosen by Kelly to use would be suited for them in their current situation. The Corporate Value Model is useful because of its values companies which are privately owned Kelly prefers to use the corporate value model is actually applicable considering that Orange Brite is on the stage of immense progress. Additionally, with the fact that the company has never paid any dividends. Career Life Chegg Home Study tools My courses My books Question: When Ryan Bang concocted his cleaning compour When Ryan Bang concocted his cleaning compound, some twenty years ago, il that his wife, and be were trying to do was to come up with a sweetergente yet tougher, cleaning product Little did he realure that someday he would be the proud owner of a milion dollar fim debating whether or not to sell stock to the public After having peddled acuum Cleaners and floor wax products at state fairs and trade shows throughout the Midwest, Ryan and Realed that there was a dire need for a cearing and polishing product that was free from harsh chemicals, environmentally friendly, and tough on dirt and grime. So Ryan spent man hours in his garage at the country home experimenting with various leansing agents, and extracts until he finally came up with what he proudly calle Bang The perfect cleaner and polis made from the pet of Valencia oranges. Not only was the mature sweet smeling, it was an effective solvent and degreaser which worked wonders on their latchen cabinets at home So spurred on by their close friends, the family formed the own company-Bangl Cleaning Supplies Inc. Later with the help of their children, Deana, Dan and Dave, they used direct response television direct mail, and e-commerce channels to help grow the company at a phenomenal rate. When the Home Shopping Network agreed to let them show of the merchandise about 5 years ago, major retailers Wil Mart and Costco took notice and started stocking their product on their shelves Wirin twenty years, there had grown to over 500 million and their production facilities were beginning to feel the strain. Their product line hadded toidude air fresheners soap bars, liquid soaps, tot removes and a variety of deaning tool Thought this success, the family always focused on customer need and satisfaction was encouraging the customers to provide them with feedback and testimonials. Their latest addition, an increase and wood protector, seemed to be gaining wide optance both in the United States and Ryan, who wants nearing 75 years of age, new that they would need to raise significant amounts of capital they wanted to be growing and expanding the product the Stat actively involved in the business, he had asked the rest of his family for their suggestions regarding the possibility of going public byssuing an Initial public offering IPO Dean andere strong sported the idea because they felt that with competitors coming up with subtroducts. They need to stay ahead of the game. Dar on the other hand agreed and recommended that they groduction and concentrate on the ting forts. He preferred that the firmay things on external capital and Puting control Athey weighing at the factors, jan decided to the bit of ang the money vaan BE 2 3 5 6 Q W E R T Z . S F G H Chegg Home Study tools My courses My books Career Life hech weighing at the factors decided to the puby framing the money in IPO Dar Dar Dave. He said he wee of you to the most prestigious business school in the country Northwood University obvious to depend totally on the investment Banking festa come up with the right pro Why don't you put your heads together and figure out what is the minimum price that we should all our stock foto go public say we 30 milion sham sure we can find a way of retaining control of abortion of the shareholding and w the much-needed cash Dan's point of loss of control is a good but I am not in favor of Outsourcing production. Our success has come from our and would be diedit we the produce the product SeDen Dan, and Dave got to work. They at they would need industry and competitors franca data que presente in data for three of the public traded competition in the person and household products Industry sector and present the company's post your ncome statements and balance sheets respectively Deana preferred to the Corporate Model why there wastimated as the sum of s discounted free cash flow cash flows wered by stracting the first capital Investment from the year's iet operating profits are NOPAT) and were discounted at a stable risk ated discount weighted average cost of captured that the firm's true cash flows would grow at 20% during the first year during the second year, and finally settle down to a long-term growth rate of others. The mosted by subtracting out the firm's outstanding debt owed to creditors from the Dead aree rate of mult premium and the rage bea of the competitors when determining the firm's cost of equity. It should be noted that the company's stated to going forward Having worked on various valuation projects for coming from Dar was a strong advocate of the of multiples models for valuing common stock moddingsbrice-coming pricepricebook and price cash flow multiples comunion with forecasted values for the Firm's caring a book values, and a fost and the dyerve compounded growth rate when forecasting themes and the courted the year ahead price forecasts by Deed rate frumonegutsed on the Caring Modeling the same inputs that Dana Dave's old finance professor, D Dennis When had had indoctrinated him in the art common stock on the counting future dividendes uredate of retum and various growth in conjunctionary bemark whenvaluing growth comes was Witherspoons According we decide votlegrowth rate model to value the firm with growth of former food by 20 for the two years, and a long term growth. The company's most recent A 5 E R z S D G Chegg Home Study tools My courses My books Dawsold finance professor Dr. Dennis Witherspoon on the other hand had indoctrinated him in the art of common stock in the counting of future idends. Always use a realistic required rate of return and various growth rate scenarios in conjunction with industry benchmarks, when aluing growth wa Dr Witherspoon's advice. According Dave decided to use a variable growth rate model to value the firm's equity with growth smotions of 30% for the first three years, followed by 20% for the no two years, and a long-term growth mumption of others. The company's most recent dividend was $125 per share What wil we do our three estimates are totally naked Deanabolding rather concerned "Wet have to go back to the drawing table and examine on said the ever resourceful Dan "We'll each have to be within a reasonable bolark or Dad going to fil Figure 1 Key Valuation Ratios for Top 3 Competitors Company Company Company Price Earings 23.6 26 228 Price / Book 121 42 Price Sales 29 23 29 PriceChow 12 16 147 Dividend Yield 2 15 17 Beta 12 Mecent Price 56247 $5229 $573 Figure 2 Income Statements Ka-Boom Cleaning Supplies, Inc. 2 3 # to 5 6 W E R. Z S G Figure 2 Income Statements Ka-Boomleaning Supplies, Inc. 2014 2015 2016 2017 2018 Revenue 100 100.000 225.000.000 300.250.000 400.150.000 500.000,000 COGS (45.315.000 100.000.000 1547122.50010134.068,000 255.000.000) Groston 56785.000 2000.000 15.500 216.083.000 245.000.000 Depreciation 3.062565 0.600,000 206.746) 01.042.540) 19.703125 Operating Expenses BLOG 72.000.000 37072.500 1141653.100) 140,000,000) Earnings Before it 10.193.35 41.400.000 254 7285.250 95.296.875 nost Expense 11743,025 2760.000 LES 3.165.7601 (B0062501 Earning for 16.249.29 3600.000 50.97289 22219-500 290.625 Income Tom 09.127.26 52.000 20. 22776.95 130 551,719 Nathome 25116000 403 10.4.6.75 56.738.905 Figure Balance Sheets Bol Cleaning Supplies Inc 3 5 6 7 Q W E R . Z S D E G H T V Net Income 7422054 25.116.000 BOB 40.642.675 58.738.906 Figure Balance Sheets Boom Cleaning Supplies, Inc. 2014 2015 2016 2017 2018 Current Assets 25.049,832 29.000.000 45.573.081 57,631600 64,687,500 Fixed Assets 30,636462 3.000.000 42.067.499 70.426,400 97,031250 Total Assets 56666 2947.000.000 87.640 540 129,048.000 161778.750 Current Liabilities 4229.601 4600.000 2.128.108 8,609,600 13,343.750 Long Term Debt 15% per year 26, 336,694 18.400.000 12.512432 34,438,400 53,375.000 Owners Equity 28.000.000 52.000.000 72.000.000 85.000.000 95,000,000 Total Cables & Owners' Equity 55.666,295.000.000 1540.54028048.000 161718.750 Based on Dean's preference for the Corporate Value Moon what would the company's selling price per sharebe if they were to 30 million shares? Expert Answer 2 3 5 W E R . Z Z N . S F G H Y X c 2. Comment on Kelly's preference of the corporate value model. Based on her approach, what would Orange Brite's selling price per share be if they were to issue 30 million shares? The Corporate Value Model that chosen by Kelly to use would be suited for them in their current situation. The Corporate Value Model is useful because of its values companies which are privately owned Kelly prefers to use the corporate value model is actually applicable considering that Orange Brite is on the stage of immense progress. Additionally, with the fact that the company has never paid any dividends