Estimate the value of ABC. following the sum of parts approach.

ABC. itself (consolidated financial statement):

• EBIT = $500M
• Capital Invested = $2,000M
• Total debt outstanding = $500M
• Cash holdings of $300M
• Cash adjusted cost of capital = 10%
• In stable growth stage with 5% growth rate in EBIT
• Tax rate = 40%

Subsidiaries information:

• 70% holdings of SBC
  • $100M EBIT, $500M Capital Invested, $200M debt, and $100M cash
  • A public firm with MV of equity $1 Billion
• 30% holdings of EBV
  • $100M debt and $50M cash
  • A private firm with estimated MV of equity $500M
• 20% hondings of SDC
  • $200M debt and 100M cash
  • A public firm with MV of equity $700 Million

Use cash-adjusted ROC and apply 20% discount on minority holdings value. You can use no discount and no premium for cash value.