Required:

In Excel prepare a capitalized cash flow valuation for OTE, using the information provided in the exhibits.

Exhibit I

Over The Edge Inc.

Balance sheet

As at December 31

Current year | Prior year

Cash $ 4,560 |$ 12,720

Investments | 29,850

Accounts receivable 1,370,150 | 1,112,457

Income taxes receivable 36,160 |

Inventory 1,196,190 | 938,945

Prepaids 4,920 | 4,920

TOTAL CURRENT ASSETS 2,611,980 | 2,098,892

Property, plant, and equipment 4,244,413 | 2,998,749

Intangible assets 13,883 |

Due from shareholder 21,500 | 21,500

Total Assets $ 6,891,776 | $ 5,119,141

Demand bank loan $ 375,422 | $ 96,800

Accounts payable and accruals 1,409,932 | 1,175,915

Warranty accrual 315,231 | 259,412

Deferred revenue 156,500 |

Current portion of term loan 141,000 | 141,000

Income taxes payable | 11,700

2,398,085 | 1,684,827

Term loan 572,000 | 713,000

Other long-term liabilities 1,128,570 |

Share capital 150,100 | 150,100

Retained earnings 2,643,021 | 2,571,214

TOTAL Liabilities and shareholder's equity $ 6,891,776 | $ 5,119,141

Over The Edge Inc. Statement of income and retained earnings For the year ended December 31

Current Year | Prior Year Sales

$ 8,959,800 | $ 8,834,000

Cost of sales 5,949,648 | 6,129,709

Gross profit 3,010,152 | 2,704,291

Expenses:

Advertising and promotion 357,900 | 266,500

Amortization 219,163 | 166,584

Automobile 140,800 | 102,600

Bad debts 17,250 | 19,110

Donations 1,200 | 1,000

Dues and fees 7,500 |

Insurance 69,600 | 57,200

Interest and bank charges 119,203 | 46,600

Office 101,200 | 108,700

Professional fees 67,700 | 34,800

Property taxes 44,700 | 40,900

Rent expense 84,654 |

Repairs and maintenance 207,100 | 155,100

Salaries and wages 1,160,460 | 1,175,600

Travel 117,666 | 103,900

Utilities 67,600 | 60,200

Warranty 72,059 | 69,482

Income before taxes 154,397 | 296,015

Income taxes 33,840 | 76,754

Net income 120,557 | 219,261

Retained earnings, opening 2,571,214 | 2,360,953

Dividends 48,750 | 9,000

Retained earnings, closing $ 2,643,021 | $ 2,571,214

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