Q2. A manufacturer of paddle boards, Lost Lake Paddle Boards, has decided to raise money through an initial public offering (IPO). They have been growing for five years since their initial investment of $200,000. They have approached you, a recent graduate of the KPU School of Business, to do a valuation to help them with the marketing of their IPO.

Here is the December 31, 2021, Balance Sheet for Lost Lake:

Here is the Income Statement for Lost Lake for the Year Ended December 31, 2021:

In order to construct your financial projections, which you will need for your valuation, assume the following ratios and values will exist throughout the time span with which you will be doing your valuation:

Assume that Lost Lakes estimated Beta is 1.6% that the risk-free rate is 3% and the return on the entire market for companies is 9%.

Remember the CAPM formula: Cost of capital = Risk free rate + BETA X (Market return Risk free rate)

Also remember to enable iterative calculation in excel.

Using Excel create a comprehensive financial model to determine the per share price (valuation) for Lost Lake Paddle Boards. Forecast for five years and then assume for the terminal valuation phase that the growth rate after year five is 1.5%.

Also do an analysis showing the change in valuation / share price based on a range of different inputs for: 1. different sales growth 2. different discount rates and 3. Different growth rates for the terminal valuation phase.

EXCEL ANSWERS ONLY PLEASE