Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use Excel to solve please high rated expert pleaseee? QUESTION 1 Use the Free Cash Flow method of valuation and the following data, to calculate

image text in transcribed

Use Excel to solve please high rated expert pleaseee?

QUESTION 1

Use the Free Cash Flow method of valuation and the following data, to calculate the value for a venture with the following information. Expected sales at year zero (or beginning of year 1): $2.50 M; growth rate in sales for the first 8 years: 35%; and for years 9-on: 10%; Annual profit margin (or EBIAT/Sales) for all years=22%; Annual asset intensity ratio (or (FA+WC)/Sales) for all years = 32%; discount rate in years 1-8: 30%, and in years 9-on: 16%.

QUESTION 2

You are given the following information:

  • Baseline (last year or year 1) sales: $12.00 million
  • Sales growth rate for years 1-7: 45%
  • Sales growth rate for years 8-10: 25%
  • Sales growth rate for years 11-on: 8%
  • Profit margin for years 1-10: 35%
  • Profit margin for years 11-on: 18%
  • Discount rate or cost of capital: 30% during years 1-10; and 12% for years 11-on.

Answer the following questions:

  1. What is the value of this company using the Fundamental Method of valuation?
  2. For $3.0 million investment, what portion of the company should be given up?
  3. Assume you are a financial consultant to the entrepreneur, and this entrepreneur has asked you to advise her regarding the $3.0 million financing. How will you go about advising your client? Outline your thought process in this regard
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Management

Authors: Cheol Eun, Bruce G. Resnick

8th edition

125971778X, 978-1259717789

More Books

Students also viewed these Finance questions

Question

What are the application procedures?

Answered: 1 week ago

Question

Why are ratios and trends used in financial analysis?

Answered: 1 week ago