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Consider the following recent financial statements for the Philadelphia Pretzel Company: Please provide full answers/show the work 2016 Income Statement Sales 2,000 COGS 1,500 EBIT

Consider the following recent financial statements for the Philadelphia Pretzel Company: Please provide full answers/show the work

2016 Income Statement

Sales

2,000

COGS

1,500

EBIT

500

Interest expense

20

Taxable income

480

Taxes

192

Net Income

288

2016 Balance Sheet

Cash

0

Accounts payable

150

Accounts receivable

100

Total current liabilities

150

Inventory

200

Total current assets

300

Long-term debt

275

Common stock

100

Fixed assets

700

Retained earnings

475

Total

1000

Total

1000

2016 Statement of Cash Flows

Operating activities:

Net Income

288

Depreciation

70

Change in accounts receivable

30

Change in inventory

(60)

Change in accounts payable

20

Cash flow from operating activities

348

Investing activities:

Capital expenditures

(250)

Cash flow from investing activities

(250)

Financing activities

Repayment of borrowing

(18)

Cash flow from financing activities

(18)

Assuming that the firms future cash flow will grow at 6% per year and their cost of capital is 16%, estimate the fair market value (i.e., the enterprise value) of PPC as of year-end 2016. (10 points)

Estimate PPCs stock price, if there are 200 shares outstanding. (2 points)

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