Manarong is manufactures, markets and distributes water sport boats. Using discounted free cash flow, you value the company's operation at $3,500 million. The company has a 25% stake in a non consolidated subsidiary. The subsidiary is valued at $600 million. The investment is recorded on MarineCo's balance sheet as an equity investment of $60 million. MarineCo is looking to increase its ownership. The company's marginal tax rate is 24%.

Required:

1. Based on this information, what is Menaroing's enterprise value? 5 marks
2. If new management announced its plan to sell the company's stake in the subsidiary at its current value, how would the change your valuation?