Question
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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