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Jane Winfield would like to buy Ted Garner's company. She has conducted a detailed financial analysis of Ted's firm and has determined the following: 1.
Jane Winfield would like to buy Ted Garner's company. She has conducted a detailed financial analysis of Ted's firm and has determined the following: 1. Book value of the inventory: $250,000 2. Discount rate on future earnings: 24 percent 3. Book value of the plant and equipment: $150,000 4. Fair market value of the inventory: $400,000 5. Fair market value of other intangibles: $60,000 6. Number of shares of common stock: 100,000 7. Fair market value of the plant and equipment: $400,000 8. Price/earnings multiple: 9 9. Book market value of other intangibles: $30,000 10. Estimated earnings over the next five years: Year 1 $200,000 Year 2 300,000 Year 3 400,000 Year 4 500,000 Year 5 600,000 Based on this information, how much should Jane valuate the business according to each of the following methods: adjusted tangible assets, P/E, and discounted future earnings? Based on your findings, recommend the valuation method she should use. Finally, given all of your calculations, estimate what the final price will be. Enter your answers here. a. Adjusted tangible assets valuation:__ b. Price/earnings valuation: - c. Discounted future earnings valuation: d. Final sales price
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