You are the head of the acquisitions department of a company. The potential investment in a steel manufacturing company, Steel Co., is currently under review. Below is some information about the projections Year 2 Year 3 Year 4 Year 5 Year 6 After Year 6 Growth rate estimation 5% 3% 2% 4% 5% 3% EBIT $2,03,700 $1,57.400 $1,31,000 $1.33,000 $1,38,300 $1,40,000 A Assets $1,15,000 $1,02,000 $83,200 $38,000 $38,900 $40,200 A Operating liabilities $34,500 $34,500 $26,000 $3,100 $9,300 $3,600 |Number of outstanding shares 27.250 Current share price $20.91 Net debt $2.40,000 WACC Inflation 3% Effective tax rate 10% Terminal growth rate 3% Terminal date Year 6 Extract from the reformatted income statement Year 0 Year 1 Tons of steel sold 16,000 3,100 Selling price per ton $630 $620 Cost price per ton $54 $545 Sales $1,63,80,000 $2,05,22,000 |Cost of goods sold $1 40,40,000 $1,80 39 500 |Gross prof :23,40,000 :24.82.500 Sales, general, and admin costs $2,34,000 $2.48,250 Operating expenses -$19 62,000 $20 40 250 EBIT $1,44,000 $1,94,000 Extract from the reformatted balance sheet Year 0 Year 1 Accounts receivable $17.23,400 $22.41,000 Inventory $24,80,000 $34.62,000 Other current assets $62,22,050 $51,00,860 Ending PPE (net) $50,78,650 $50,93,140 Total assets $1,55,04,100 $1,58,97,000 Accounts payable $7,76,809 $10,42,146 Other current liabilities $58,25,971 $52,84.134 Long-term operating liabilities $39,41,020 39,42.420 Capita $49,60,300 $56,28,300 Liabilities and owner's equity $1,55,04,100 $1,58,97,000