Prepare an economic balance sheet based on the exhibit that is attached below. Its share price is $12.08 and it has 1,200 shares outstanding. It's debt is trading at 102% of market value, It owns $3,000 in unused land. IT creates $3,800 from financing.

THE MARKET VALUE CON Income Statement and Balance Year -1 Year O Balance Sheet-Assets Cash balance.. . ... $ 171.4 Accounts receivable.... 571.2 Inventory... 286.5 Total current assets ........... $1,029.1 Net property, plant and equipment ... 7,539.4 Total assets.... . $8,568.5 $ 188.5 628.3 315.2 $1,132.0 8.567.5 $9,699.5 Balance Sheet-Liabilities & Equity Accounts payable................5 122.8 S 135.1 Other current operating liabilities 119.9 131.9 Total current liabilities... $ 242.7 $ 267.0 Debt .. 4,800.0 5,200.0 Total liabilities.................. $5,042.7 $5,467.0 Common stock. $1.802.4 $1,802.4 Retained earnings ............... 1,723.3 2,430.0 Total shareholders' equity ... ... ... $3,525.7 $4,232.4 Total liabilities and equities......... $8,568.5 $9,699.5 $3,769.7 -1,621,0 Income Statement .. ............... $3,472.0 Cost of goods sold.. -1,473.6 Gross margin .................... $1.953.4 Selling, general and administrative .. . -479.8 Operating income......... . $1,473.6 >1,913.0 Interest expense.................. 307.0 Income before taxes............... $1,166.6 Income tax expense............... 443.3 Net Income...................... $723.3 $2,148.7 -527.8 $1.621.0 -384.0 $1,237.0 -470.0 $ 766.9 Exhibit may contain small rounding errors Solution on pages 34-35. 1.3 VALUATION PRINCIPLES LO2 Understand the principles underpinning the commonly used valuation methods An asset has value to an investor because the investor believes the asset will generate cash flows in the future. The value of an asset depends on the magnitude, timing, and risk of the cash flows the investor expects it to generate. Holding everything else constant, the value of an asset increases if the magnitude of its expected cash flows increases, if its expected cash flows arrive sooner, or if its risk (risk-adjusted discount rate) decreases. As we discuss below, the discounted cash flow (DCF) valuation model directly results from these valuation principles. Valuation Key 1.2 The value of an asset depends on the magnitude, timing, and risk of the cash flows (called free cash flows) the investor expects it to generate. The discounted cash flow (DCF) valuation model directly results from these valuation principles. Introduction to Measuring Free Cash Flows The DCF model measures the value of an asset as the sum of the expected cash flow's the asset gener- ates after adjusting each expected cash flow for its timing and risk. In the context of the valuation of THE MARKET VALUE CON Income Statement and Balance Year -1 Year O Balance Sheet-Assets Cash balance.. . ... $ 171.4 Accounts receivable.... 571.2 Inventory... 286.5 Total current assets ........... $1,029.1 Net property, plant and equipment ... 7,539.4 Total assets.... . $8,568.5 $ 188.5 628.3 315.2 $1,132.0 8.567.5 $9,699.5 Balance Sheet-Liabilities & Equity Accounts payable................5 122.8 S 135.1 Other current operating liabilities 119.9 131.9 Total current liabilities... $ 242.7 $ 267.0 Debt .. 4,800.0 5,200.0 Total liabilities.................. $5,042.7 $5,467.0 Common stock. $1.802.4 $1,802.4 Retained earnings ............... 1,723.3 2,430.0 Total shareholders' equity ... ... ... $3,525.7 $4,232.4 Total liabilities and equities......... $8,568.5 $9,699.5 $3,769.7 -1,621,0 Income Statement .. ............... $3,472.0 Cost of goods sold.. -1,473.6 Gross margin .................... $1.953.4 Selling, general and administrative .. . -479.8 Operating income......... . $1,473.6 >1,913.0 Interest expense.................. 307.0 Income before taxes............... $1,166.6 Income tax expense............... 443.3 Net Income...................... $723.3 $2,148.7 -527.8 $1.621.0 -384.0 $1,237.0 -470.0 $ 766.9 Exhibit may contain small rounding errors Solution on pages 34-35. 1.3 VALUATION PRINCIPLES LO2 Understand the principles underpinning the commonly used valuation methods An asset has value to an investor because the investor believes the asset will generate cash flows in the future. The value of an asset depends on the magnitude, timing, and risk of the cash flows the investor expects it to generate. Holding everything else constant, the value of an asset increases if the magnitude of its expected cash flows increases, if its expected cash flows arrive sooner, or if its risk (risk-adjusted discount rate) decreases. As we discuss below, the discounted cash flow (DCF) valuation model directly results from these valuation principles. Valuation Key 1.2 The value of an asset depends on the magnitude, timing, and risk of the cash flows (called free cash flows) the investor expects it to generate. The discounted cash flow (DCF) valuation model directly results from these valuation principles. Introduction to Measuring Free Cash Flows The DCF model measures the value of an asset as the sum of the expected cash flow's the asset gener- ates after adjusting each expected cash flow for its timing and risk. In the context of the valuation of