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P5-7. Elsa Company shared the following prospective financial information to a group of private equity investors. You were tasked to compute for the approximate price that should be set if the investor buys out 15% share in Elsa Company 2021 2022 2023 2024 2025 Revenues 2,250,000 2,750,000 3,250.000 3,500,000 4,000,000 Variable COGS 562,500 687,500 812,500 875,000 1,000,000 Fixed COGS 750,000 750,000 750,000 750,000 750,000 Gross profit 937,500 1,312,500 1,687,500 1,875,000 2,250,000 Variable operating expenses 450,000 550,000 650,000 700,000 800,000 Fixed operating expenses 200,000 200,000 200,000 200,000 200,000 Operating income 287,500 562,500 837,500 975,000 1,250,000 Other pertinent assumptions can be found below: Depreciation of P500,000 is included in fixed cost of goods sold while P100,000 of depreciation is charged to fixed operating expenses. Income tax rate is at 20% Elsa Company estimates it needed P200,000 cash on an annual basis to sustain its capital investments. From 2026 until perpetuity, the company estimates net cash flows to grow at constant rate of 4%. Elsa Company has debt-to-equity ratio of 1.5. Pre-tax cost of debt is at 4% while cost of equity is at 9%. Elsa Company has outstanding loans of PhP2,000,000 Compute for the following: 1. Weighted average of cost of capital of Elsa Company 2. Net income from 2021 to 2025 3. Terminal value of Elsa Company 4. Net cash flow to the firm 5. Net cash flow to equity 6. Price to pay to buy 15% share in Elsa Company