Williams Company is a manufacturer of auto parts having the following financial statements for $20$X$1-20$X$2.$

Balance Sheet

December $31$

$20$X$220$X$1$

Cash $ $270,000$ $ $145,000$

Accounts receivable $160,000235,000$

Inventory $395,000185,000$

Total current assets $ $825,000$ $ $565,000$

Long$-$lived assets $1,740,0001,600,000$

Total assets $ $2,565,000$ $ $2,165,000$

Current liabilities $320,000275,000$

Long$-$term debt $900,000900,000$

Shareholders$$ equity $1,345,000990,000$

Total debt and equity $ $2,565,000$ $ $2,165,000$

Income Statement

For the years ended December $31$

$20$X$220$X$1$

Sales $ $3,600,000$ $ $3,700,000$

Cost of sales $2,700,0002,800,000$

Gross margin $900,000900,000$

Operating expenses$*$footnote asterisk $510,000340,000$

Operating income $390,000560,000$

Taxes $136,500196,000$

Net income $ $253,500$ $ $364,000$

Cash Flow from Operations

$20$X$220$X$1$

Net income $ $253,500$ $ $364,000$

Plus depreciation expense $110,000100,000$

$+$ Decrease $($increase$)$ in accounts receivable and inventory $(135,000)$

$+$ Increase $($decrease$)$ in current liabilities $45,000$

Cash flow from operations $ $273,500$ $ $464,000$

$*$footnote asteriskOperating expenses include depreciation expense.

Additional financial information, including industry averages for $20$X$2,$ where appropriate, includes:

$20$X$220$X$1$ Industry $20$X$2$

Capital expenditures $ $123,500$ $ $200,000$

Income tax rate $35\%35\%35\mathrm{.}0\%$

Depreciation expense $ $110,000$ $ $100,000$

Dividends $ $40,000$ $ $40,000$

Year$-$end stock price $ $3\mathrm{.}25$ $ $425\mathrm{.}00$

Number of outstanding shares $1,900,0001,900,000$

Sales multiplier $1\mathrm{.}50$

Free cash flow multiplier $18\mathrm{.}00$

Earnings multiplier $9\mathrm{.}00$

Cost of capital $5\%5\%$

Accounts receivable turnover $11\mathrm{.}10$

Inventory turnover $10\mathrm{.}50$

Current ratio $2\mathrm{.}30$

Quick ratio $1\mathrm{.}90$

Cash flow from operations ratio $1\mathrm{.}20$

Free cash flow ratio $1\mathrm{.}10$

Gross margin percentage $30\mathrm{.}0\%$

Return on assets $($net book value$)20\mathrm{.}0\%$

Return on equity $30\mathrm{.}0\%$

Required:

Calculate free cash flow at Williams Company for each of the two years.

Develop a business valuation for Williams Company for $20$X$2$ using the following methods:

$(1)$ book value of equity,

$(2)$ market value of equity,

$(3)$ discounted cash flow $($DCF$),$

$(4)$ enterprise value, and

$(5)$ all the multiples$-$based valuations for which there is an industry average multiplier.

For the calculation of the DCF valuation, you may use the simplifying assumption that free cash flows will continue indefinitely at the amount in $20$X$2.$