Income statement of 2018

question 1 :

Determine the annual increases in net operating working capital (NOWC) and capital expenditure (CAPEX) for SoftTec for the year 2014 to 2018

Question 2

Project annual equity valuation cash flow for the years 2014 to 2018.

Question 3

Estimate SoftTecs equity value in dollars and per share at the end of 2013.

Thank you so much!!!

1. (50 pts) The SoftTec Products Company is a successful small, rapidly growing, closely held corporation. The equity owners are considering selling the firm to an outside buyer and want to estimate the value of the firm. Following is last year's income statement (2013) and projected income statements for the next four years (2014-2017). Sales are expected to grow at an annual 7 percent rate beginning in 2018 and continuing thereafter. Selected balance sheet accounts at the end of 2013 were as follows. Net fixed assets were $50,000. The sum of the required cash, accounts receivable, and inventories accounts was $50,000. Accounts payable and accruals totaled $25,000. Each of these balance sheet accounts was expected to grow with sales over time. No changes in interest-bearing debt were projected and there were no plans to issue additional shares of common stock. There are currently 10,000 shares of common stock outstanding. Data have been gathered for a "comparable" publicly-traded firm in the same industry that SoftTec operates in. The cost of common equity for this other firm, Wakefield Products, was estimated to be 25 percent. SoftTec has survived for a period of years. Management is not currently contemplating a major financial structure change and believes a single discount rate is appropriate for discounting all cash flows