Today is 31 December 2022. Industrial manufacturer McMiller Brothers is thinking about launching a new division "McM Plus". As a consultant, you are expected to help them decide whether or not the company should go ahead with this project. In this context, you are asked to project a 10 year FCF and a RV in the final year (DCF Valuation). Additionally, you will have to get the value of this new business through market multiples.

a. In 2023 , Revenues are estimated to be $25mn. From thereafter (until 2033), revenues are expected to grow at 5% annually. b. COGS is estimated to be 50% of sales. c. Overall expenses (all other expenses except for depreciation) are estimated at 10% of sales. d. Depreciation cost is $3mn annually. e. Applicable tax rate is 30%. f. Working Capital requirements are estimated at 11% of sales volume. g. WACC =12% h. Perpetual growth rate =4% i. Debt =$22mn. Cash =$1. j. Sector average EV/Sales 2022=5.5x k. Sector average EV/EBITDA 2022=11x I. Sector average P/E 2022=18x The final valuation of a company may be different depending on the method chosen. What would you tell McMiller Brothers the value of McM plus would be? (35 points)