I am having a hard time figuring out the calculations for the questions listed below. IF someone could help start so I can see what I am missing, I would appreciate it.

1) What is the PV of operating cash flows over the competitive advantage period?

2) What is the residual value of the firm after the period of competitive advantage?

3) What is the value of the firm's equity?

4) Compare the market value of equity ($50/share) with the estimate provided by SVA for scenario 1. What recommendations would you make to top management based on your analysis? Now compare the market value of equity ($70/share) with your SVA estimate. What would you recommend now?

All dark shades must be filled in.

SVA EXERCISE Given: Base sales: Sales growth: Operating PM Fixed capital inv rate WC inv rate Cash tax rate COC Market securities Debt # shares outstanding Sales Operating Profit NOPAT New Investment Add'l WC Free cash flow PV to year 10 Pv after year 10 1. Value years 1-10 2. Value after year 10 Market securities Total Value Less debt 3. Value of equity ($ '000) $250,000 Base year Fade rate Yr. 10 and after 1.15 0.01 1.05 0.20 0.01 0.1 0.15 0.09 0.38 0.11 $20,000 $50,000 5,000,000 Note: Fade rate is the year-to-year reduction in the rate to some steady state rate Year 1 = 1.14, year 2 = 1.13, etc. Note: on a per $ of sales basis Note: on a per $ of sales basis (all dollars in thousands) Year1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 $285,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $54,150.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $33,573.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $5,250.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $3,150.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $25,173.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Year 9 Year 10 Residual $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00