Question 1: Suri Foods Inc. in a New Jersey based manufacturer of prepared, heat and serve Indian dishes for both the North American and European markets. It currently is earning an EBIT of $135 million. Its tax rate is 40.00% and it has a Weighted Cost of Capital of 18.00%. What is Suri Food's enterprise value?

Question 2:

The above data describes certain features of Orfendi Ice Cream Inc., a small company that has developed a cult following as a sort of local Ben and Jerrys that supplies non-chain grocery stores and convenience stores with exotic ice cream flavors that can not be purchased elsewhere. It is a family owned company that has assets of $5.6 million and enjoys profits of around $362,000 per year. The core source of employment in the area is based on the aero space business which is highly cyclical but they have always managed to eke out a profit even in the worst of times. Recently a business consultant has advised them they are not getting the return on equity that might be expected from a firm of this kind and recommends that they increase their leverage. Below are data describing their current situation under different economic conditions. The scenario analysis follows.

Question 3:

In the tables above, the cell named 'A' should be,

In the table above, the cell labeled 'D' should be,

$5,600 in thous ands) Current Assets Cost of Debt Current Debt Rati o ProposedDebt Rati o Annual EBIT in 1,000's) 11.00% 20,00% 20.00% Bad Economy OK. Economy Good Econ S392 $728 $1,064 omy Present Debt Level: 20.00% Ec State Bad O.K Good EBIT 392,000 123,200 268,800 107,520 161,280 726,000 123,200 604 ,800 241 920 362 880 1 064,000 123,200 940,800 376,320 564,480 Int Exp EBT Taxes (40 %) NI BEP ROE