Using your income statements and cash flows from the past two modules, calculate two Net Present Values using the two approaches to determining a Residual Value. As an additional calculation, identify how much the residual value impacts your maximum purchase price or Net Present Value. The following assumptions will apply: ?The Discount Rate will be 15%

AD 714 M&A Week 1 Assignment Module 2_Woo, Ga Won 2007 UNIT S Difference (07-08) PRICE 500,000 UNIT S 2008 PRICE 40,000 UNIT S Difference (08-09) PRICE 540,000 UNIT S 2009 PRICE 37,800 UNIT S Difference (09-10) PRICE 577,800 UNIT S 2010 PRICE 38,900 UNIT S Difference (10-11) PRICE UNIT S 616,700 2011 PRICE 38,900 UNIT S Difference (11-12) PRICE UNIT S 655,600 2012 PRICE 38,900 UNIT S Difference (12-13) PRICE UNIT S 694,500 2013 PRICE 38,900 UNIT S Difference (13-14) PRICE UNIT S 733,400 2014 PRICE 38,900 UNIT S Difference (14-15) PRICE UNIT S 772,300 2015 PRICE 38,900 UNIT S Difference (15-16) PRICE UNIT S 811,200 2016 PRICE 38,900 UNIT S Difference (16-17) PRICE UNIT S 850,100 2017 PRICE 38,900 UNIT S Difference (17-18) PRICE UNIT S 889,000 2018 PRICE 38,900 UNIT S Difference (18-19) PRICE UNIT S 927,900 2019 PRICE 38,900 UNIT S PRICE 966,800 REVENUES PRODUCT S SERVICE T OT AL REVENUE $25,000,000.00 $3,080,000.00 $2.00 $2,866,968.00 $1.56 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $2,973,484.00 $1.78 $1,500,000.00 $3.00 $93,000.00 $-0.05 $1,593,000.00 $2.95 $82,620.00 $-0.05 $1,675,620.00 $2.90 $87,810.00 $-0.05 $1,763,430.00 $2.85 $87,810.00 $-0.05 $1,851,240.00 $2.80 $87,810.00 $-0.05 $1,939,050.00 $2.75 $87,810.00 $-0.05 $2,026,860.00 $2.70 $87,810.00 $-0.05 $2,114,670.00 $2.65 $87,810.00 $-0.05 $2,202,480.00 $2.60 $87,810.00 $-0.05 $2,290,290.00 $2.55 $87,810.00 $-0.05 $2,378,100.00 $2.50 $87,810.00 $-0.05 $2,465,910.00 $2.45 $87,810.00 $-0.05 $2,553,720.00 $2.40 $26,500,000.00 $50.00 $53.00 $3,173,000.00 $1.95 $28,080,000.00 $29,673,000.00 $54.95 $52.00 $2,949,588.00 $1.51 $30,946,968.00 $32,622,588.00 $56.46 $53.56 $3,061,294.00 $1.73 $33,920,452.00 $35,683,882.00 $55.34 $58.19 $3,061,294.00 $1.73 $38,745,176.00 $36,893,936.00 $57.12 $59.92 $3,061,294.00 $1.73 $41,806,470.00 $61.65 $3,061,294.00 $1.73 $44,867,764.00 $63.38 $3,061,294.00 $1.73 $47,929,058.00 $65.11 $3,061,294.00 $1.73 $50,990,352.00 $66.84 $3,061,294.00 $1.73 $54,051,646.00 $68.57 $3,061,294.00 $1.73 $57,112,940.00 $70.30 $3,061,294.00 $1.73 $60,174,234.00 $72.03 $3,061,294.00 $1.73 $63,235,528.00 $73.76 $27.32 . $39,867,420.00 $58.90 . $42,840,904.00 $60.68 . $45,814,388.00 $62.46 . $48,787,872.00 $64.24 . $51,761,356.00 $66.02 . $54,734,840.00 $67.80 . $57,708,324.00 $69.58 . $60,681,808.00 $71.36 . EXPENSES COGS (Variable) Administration (Fixed & Variable) Utilities (Variable) Rent (Fixed) Depreciation (Fixed) Consultants (Variable) $10,000,000.00 $20.00 $1,124,000.00 $0.60 $11,124,000.00 $20.60 $1,136,916.00 $5,000,000.00 $10.00 $151,600.00 $-0.46 $5,151,600.00 $9.54 $200,000.00 $0.40 $5,200.00 $-0.02 $205,200.00 $0.38 $500,000.00 $500,000.00 $1.00 $1.00 $0.07 $13,000.00 $-0.05 $2,200.00 $-0.07 $513,000.00 $502,200.00 $43,200.00 $0.95 $0.93 $0.08 $12,260,916.00 $152,604.00 $-0.36 $8,586.00 $-0.01 $18,576.00 $-0.03 $486.00 $-0.06 $-2,754.00 $-0.01 $21.22 $1,130,458.00 $0.61 $13,391,374.00 $5,304,204.00 $9.18 $152,102.00 $-0.41 $213,786.00 $0.37 $6,893.00 $-0.02 $15,788.00 $-0.04 $1,343.00 $-0.07 $531,576.00 $502,686.00 $40,446.00 $0.92 $0.87 $0.07 $2,723.00 $- $21.83 $1,130,458.00 $0.61 $14,521,832.00 $5,456,306.00 $8.77 $152,102.00 $-0.41 $220,679.00 $0.36 $6,893.00 $-0.02 $15,788.00 $-0.04 $1,343.00 $-0.07 $547,364.00 $504,029.00 $0.88 $0.81 $0.07 $2,723.00 $- $1,130,458.00 $0.61 $15,652,290.00 $5,608,408.00 $8.36 $152,102.00 $-0.41 $227,572.00 $0.34 $6,893.00 $-0.02 $15,788.00 $-0.04 $1,343.00 $-0.07 $563,152.00 $505,372.00 $0.84 $0.74 $0.07 $2,723.00 $- $1,130,458.00 $0.61 $16,782,748.00 $23.66 $1,130,458.00 $0.61 $17,913,206.00 $5,760,510.00 $7.95 $152,102.00 $-0.41 $5,912,612.00 $7.54 $152,102.00 $-0.41 $234,465.00 $0.32 $6,893.00 $-0.02 $241,358.00 $0.30 $6,893.00 $-0.02 $15,788.00 $-0.04 $15,788.00 $-0.04 $1,343.00 $-0.07 $1,343.00 $-0.07 $578,940.00 $506,715.00 $0.80 $0.67 $0.07 $2,723.00 $- $594,728.00 $508,058.00 $0.76 $0.60 $0.07 $2,723.00 $- $0.61 $19,043,664.00 $6,064,714.00 $7.13 $152,102.00 $-0.41 $248,251.00 $0.28 $6,893.00 $-0.02 $15,788.00 $-0.04 $1,343.00 $-0.07 $610,516.00 $509,401.00 $0.72 $0.53 $0.07 $2,723.00 $- $1,130,458.00 $0.61 $20,174,122.00 $6,216,816.00 $6.72 $152,102.00 $-0.41 $255,144.00 $0.26 $6,893.00 $-0.02 $15,788.00 $-0.04 $1,343.00 $-0.07 $626,304.00 $510,744.00 $0.68 $0.46 $0.07 $2,723.00 $- $1,130,458.00 $0.61 $21,304,580.00 $6,368,918.00 $6.31 $152,102.00 $-0.41 $262,037.00 $0.24 $6,893.00 $-0.02 $15,788.00 $-0.04 $1,343.00 $-0.07 $642,092.00 $512,087.00 $0.64 $0.39 $0.07 $2,723.00 $- $1,130,458.00 $0.61 $22,435,038.00 $26.71 $1,130,458.00 $0.61 $23,565,496.00 $6,521,020.00 $5.90 $152,102.00 $-0.41 $6,673,122.00 $5.49 $152,102.00 $-0.41 $6,825,224.00 $268,930.00 $0.22 $6,893.00 $-0.02 $275,823.00 $0.20 $6,893.00 $-0.02 $282,716.00 $15,788.00 $-0.04 $15,788.00 $-0.04 $1,343.00 $-0.07 $1,343.00 $-0.07 $657,880.00 $513,430.00 $0.60 $0.07 $2,723.00 $- $673,668.00 $514,773.00 $0.56 $0.07 $2,723.00 $- $689,456.00 $516,116.00 $5.08 $0.52 $0.18 $0.02 $6,534.00 $0.01 $17,334.00 $0.03 $1,167.00 $18,501.00 $0.03 $1,167.00 $19,668.00 $0.03 $1,167.00 $20,835.00 $0.03 $1,167.00 $22,002.00 $0.03 $1,167.00 $23,169.00 $0.03 $1,167.00 $24,336.00 $0.03 $1,167.00 $25,503.00 $0.03 $1,167.00 $26,670.00 $0.03 $1,167.00 $27,837.00 $0.03 $1,167.00 $29,004.00 $0.03 $17,550,000.00 $32.50 $1,320,948.00 $0.16 $18,870,948.00 $32.66 $1,310,474.00 $0.08 $20,181,422.00 $32.74 $1,310,474.00 $0.08 $21,491,896.00 $32.82 $1,310,474.00 $0.08 $22,802,370.00 $32.90 $1,310,474.00 $0.08 $24,112,844.00 $32.98 $1,310,474.00 $0.08 $25,423,318.00 $33.06 $1,310,474.00 $0.08 $26,733,792.00 $33.14 $1,310,474.00 $0.08 $28,044,266.00 $33.22 $1,310,474.00 $0.08 $29,354,740.00 $33.30 $1,310,474.00 $0.08 $30,665,214.00 $33.38 $1,310,474.00 $0.08 $31,975,688.00 $33.46 EBIT $10,250,000.00 $20.50 $1,873,000.00 $1.95 $12,123,000.00 $22.45 $1,628,640.00 $1.35 $13,751,640.00 $23.80 $1,750,820.00 $1.65 $15,502,460.00 $25.45 $1,750,820.00 $1.65 $17,253,280.00 $27.10 $1,750,820.00 $1.65 $19,004,100.00 $28.75 $1,750,820.00 $1.65 $20,754,920.00 $30.40 $1,750,820.00 $1.65 $22,505,740.00 $32.05 $1,750,820.00 $1.65 $24,256,560.00 $33.70 $1,750,820.00 $1.65 $26,007,380.00 $35.35 $1,750,820.00 $1.65 $27,758,200.00 $37.00 $1,750,820.00 $1.65 $29,509,020.00 $38.65 $1,750,820.00 $1.65 $31,259,840.00 $40.30 $- $67,676.00 $0.18 $10,800.00 $- $- $64,953.00 $0.25 $0.01 $-0.01 $- $62,230.00 $0.32 $8,200.00 $- $59,507.00 $26.10 $-4,200.00 $- $56,784.00 $25.49 $1,300,000.00 $- $54,061.00 $24.88 $0.03 $- $51,338.00 $1,130,458.00 $32.50 $- $48,615.00 $24.27 $15,000.00 $- $45,892.00 $23.05 $16,250,000.00 $- $43,169.00 $22.44 T OT AL EXPENSES Bad debt (Variable) $35,000.00 $0.62 $0.07 $12,123,000.00 Margin EBIT DA Margin 38.68% $10,750,000.00 40.57% 2.18% $21.50 $1,875,200.00 1.98% 40.86% $1.88 $12,625,200.00 42.55% 1.29% $23.38 $1,529,126.00 1.14% 42.15% $1.29 $14,154,326.00 43.69% 1.74% $24.67 $1,702,163.00 1.56% 43.89% $1.59 $15,856,489.00 45.25% 1.74% $26.26 $1,702,163.00 1.56% 45.63% $1.59 $17,558,652.00 46.81% 1.74% $27.85 $1,702,163.00 1.56% 47.37% $1.59 $19,260,815.00 48.37% 1.74% $29.44 $1,702,163.00 1.56% 49.11% $1.59 $20,962,978.00 49.93% 1.74% $31.03 $1,702,163.00 1.56% 50.85% $1.59 $22,665,141.00 51.49% 1.74% $32.62 $1,702,163.00 1.56% 52.59% $1.59 $24,367,304.00 53.05% 1.74% $34.21 $1,702,163.00 1.56% 54.33% $1.59 $26,069,467.00 54.61% 1.74% $35.80 $1,702,163.00 1.56% 56.07% $1.59 $27,771,630.00 56.17% 1.74% $37.39 $1,702,163.00 1.56% 57.81% $1.59 $29,473,793.00 57.73% 1.74% $38.98 $1,702,163.00 1.56% 59.55% $1.59 $31,175,956.00 59.29% $40.57 AD 714 M&A Week 2 Assignment Module 3_Woo, Ga Won 0 2007 1 2008 2 2009 3 2010 4 2011 5 2012 6 2013 7 2014 8 2015 9 2016 10 2017 11 2018 12 2019 25,000,000 1,500,000 26,500,000 28,080,000 1,593,000 29,673,000 30,946,968 1,675,620 32,622,588 33,920,452 1,763,430 35,683,882 36,893,936 1,851,240 38,745,176 39,867,420 1,939,050 41,806,470 42,840,904 2,026,860 44,867,764 45,814,388 2,114,670 47,929,058 48,787,872 2,202,480 50,990,352 51,761,356 2,290,290 54,051,646 54,734,840 2,378,100 57,112,940 57,708,324 2,465,910 60,174,234 60,681,808 2,553,720 63,235,528 10,000,000 5,000,000 200,000 500,000 500,000 35,000 15,000 16,250,000 11,124,000 5,151,600 205,200 513,000 502,200 43,200 10,800 17,550,000 12,260,916 5,304,204 213,786 531,576 502,686 40,446 17,334 18,870,948 13,391,374 5,456,306 220,679 547,364 504,029 43,169 18,501 20,181,422 14,521,832 5,608,408 227,572 563,152 505,372 45,892 19,668 21,491,896 15,652,290 5,760,510 234,465 578,940 506,715 48,615 20,835 22,802,370 16,782,748 5,912,612 241,358 594,728 508,058 51,338 22,002 24,112,844 17,913,206 6,064,714 248,251 610,516 509,401 54,061 23,169 25,423,318 19,043,664 6,216,816 255,144 626,304 510,744 56,784 24,336 26,733,792 20,174,122 6,368,918 262,037 642,092 512,087 59,507 25,503 28,044,266 21,304,580 6,521,020 268,930 657,880 513,430 62,230 26,670 29,354,740 22,435,038 6,673,122 275,823 673,668 514,773 64,953 27,837 30,665,214 23,565,496 6,825,224 282,716 689,456 516,116 67,676 29,004 31,975,688 10,250,000 (4,100,000) 12,123,000 (4,849,200) 13,751,640 (5,500,656) 15,502,460 (6,200,984) 17,253,280 (6,901,312) 19,004,100 (7,601,640) 20,754,920 (8,301,968) 22,505,740 (9,002,296) 24,256,560 (9,702,624) 26,007,380 (10,402,952) 27,758,200 (11,103,280) 29,509,020 (11,803,608) 31,259,840 (12,503,936) 7,273,800 502,200 10,800 (638,804) (50,000) (10,000) 8,250,984 502,686 17,334 (592,252) (50,000) (10,000) 9,301,476 504,029 18,501 (615,528) (50,000) (10,000) 10,351,968 505,372 19,668 (615,528) (50,000) (10,000) 11,402,460 506,715 20,835 (615,528) (50,000) (10,000) 12,452,952 508,058 22,002 (615,528) (50,000) (10,000) 13,503,444 509,401 23,169 (615,528) (50,000) (10,000) 14,553,936 510,744 24,336 (615,528) (50,000) (10,000) 15,604,428 512,087 25,503 (615,528) (50,000) (10,000) 16,654,920 513,430 26,670 (615,528) (50,000) (10,000) 17,705,412 514,773 27,837 (615,528) (50,000) (10,000) 18,755,904 516,116 29,004 (615,528) (50,000) (10,000) (4,992,922) 1 7,087,996 0.8695652174 8,118,752 0.7561436673 9,148,478 0.6575162324 10,201,480 0.5717532456 11,254,482 0.4971767353 12,307,484 0.4323275959 13,360,486 0.3759370399 14,413,488 0.3269017738 15,466,490 0.284262412 16,519,492 0.2471847061 17,572,494 0.2149432227 18,625,496 0.1869071502 (4,992,922) 55,546,562 6,163,475 6,138,943 6,015,273 5,832,729 5,595,467 5,320,865 5,022,702 4,711,795 4,396,542 4,083,366 3,777,089 3,481,238 REVENUES PRODUCTS SERVICE TOTAL REVENUE EXPENSES COGS (Variable) Administration (Fixed & Variable) Utilities (Variable) Rent (Fixed) Depreciation (Fixed) Consultants (Variable) Bad debt (Variable) TOTAL EXPENSES or COST OF SALES EBIT Less: Tax Post tax EBIT Add: Depreciation Add: Bad debt (other non-cash expense) (Increase) / Decrease in Working Capital Less:Capex (4,942,922) (50,000) Less: Leasehold improvement FREE CASH FLOW Discounting Factor @ 15% Discounted Free Cash Flow NPV Assumptions Leasehold improvement is considered as a capital expense and not considered part of rent Year 2007 is considered as a Year 0 and only capital expenditure and initial working capital has been considered based on sales of 2007 Working Capital Workings Debtors Sales Outstanding (Days) Inventory Turnover (times) Accounts Payable (Days) Debtors (Sales * DSO / 365) Inventory (COGS/Inventory Turnover) 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 75 12 30 5,445,205 833,333 6,097,192 927,000 1,442,466 5,581,726 6,703,272 1,021,743 1,551,037 6,173,978 7,332,305 1,115,948 1,658,747 6,789,505 7,961,338 1,210,153 1,766,457 7,405,033 8,590,371 1,304,358 1,874,167 8,020,561 9,219,404 1,398,562 1,981,878 8,636,088 9,848,437 1,492,767 2,089,588 9,251,616 10,477,470 1,586,972 2,197,298 9,867,144 11,106,503 1,681,177 2,305,008 10,482,671 11,735,536 1,775,382 2,412,718 11,098,199 12,364,569 1,869,587 2,520,429 11,713,727 12,993,602 1,963,791 2,628,139 12,329,254 Accounts Payable (Cost of sales * Accounts Payable Days / 365) 1,335,616 Working Capital 4,942,922