for developing an affordable hearing aid based on nanotechnology into a sale of your

company that has made you independently wealthy, you are bored to tears. An invest$-$

ment banker approaches you with a patented design for a low$-$cost defibrillator that

would save many lives if deployed in offices and stores globally. Intrigued by the pros$-$

pect, you obtain the following information from the bank's accountant regarding cur$-$

rent operations:

$O_n$ the basis of your experience, you believe that the year$-$to$-$year revenue growth will

be $10\%,15\%,20\%,25\%,$ and $30\%,$ respectively, over each of the next $5$ years, before

stabilizing at a $15\%$ growth rate. You expect that the Cost of Goods Sold and SGA, as

a percentage of revenue will remain at current levels. You estimate depreciation and

amortization, capital expenditures, and net working capital to grow at $10\%$ of revenues

annually. Your tax bracket is $40\%$ and you want a $20\%$ after$-$tax return on a project with

this degree of risk. $($a$)$ What is the maximum amount you are willing to pay for these

assets? $($b$)$ How does this compare with the book value of the assets? $($c$)$ How does this

compare with the value of the equity?