Regarding the Fabricare case:

In the valuation of Fabricare, Roy is trying to decide the price he is willing to pay for the firm. In a proper valuation of Fabricare, what role should each of the following play in the analysis?(e) an estimate of the value of Fabricare under current management. In addition to explaining the roles, if any, for each option, be sure to provide the dollar value under each option, and explain how you determined each number. Note: The value of Fabricare under current management can be estimated using the formula for the present value of a growing perpetuity (see Chapter 6), also known as the constant growth model. Also note that the C in the growing perpetuity model must be the next cash flow. Hint: Dont assume that all five of the methods would play useful roles. Hint for c, d, and e: The purchase of Fabricare is to be for 1993, not 1991 or 1992.

If Roy Tyson were to acquire Fabricare, what is the maximum amount that he should pay for the firm, assuming that the acquisition is effective at the beginning of 1993? Note: Use the best valuation method.

Sales revenue for 1993 is $400,000, 1994 $600,000, 1995 $900,000, 1996 $1,200,000, 1997 $1,500,000, 1998 and beyond $1,600,000. The current asking price of Fabricare is $275,000. Roy thinks 20% is appropriate.

Please show formulas for all calcuations