MBA 830 UNITS CASE STUDY The owner of a private firm has requested that you estimate the value of the firm so that it can be marketed for sale . The firm creates custom made - to order furniture . The firm's most recen results are shown in Appendix A Management expects revenues cost of goods sold , operating expenses , depreciation ( and amortization ) , and capital expenditures to grow 209 annually for the next five years with taxes emaining at 40 for each year Balance sheet items in the most recent year include $10 million of outstanding interest- bearing debt and $10 million book value of equity . The outstanding debt s expected to remain constant for this analysis and management anticipates no changes in working capital Free cash flows are estimated to grow at 5. after the five year period . Industry averages for market value of equity are three times book value for beta are 1 30 , and for market debt ratio are 209 Average market multiple for the industry is 7 times net income . an the Treasury bond rate is assumed to be 796 . Based on this information and the information covered in Unit 3 prepare a DCF and Mark Multiple analysis ( in Excel ) to help the owner estimate firm value . Please make sure to include your calculations for the following items Annual Free Cash Flows Cost of debt Cost of equity TACO Terminal Value Firm Value , Debt Value , and Equity Value Would the owner prefer the DCF or Market Multiple approach to valuation ? Why