Your client, Over The Edge Ltd. (OTE), has grown from a small custom snowboard manufacturer servicing the local market to a multinational success. Recently, OTE's snowboards were used by a gold medallist in the Winter Olympics! Fun Consolidators Inc. (FCI), a public company and the largest competitor in the industry, has expressed an interest in acquiring OTE. The December 31 year-end statements are provided in Appendix I. There are a few outstanding accounting issues that may impact them, which I have included in Appendix II. I also put together a memo for you with some information on non-recurring or unusual items incurred by OTE. I will email it to you (Appendix III). Our weighted average capitalization rate is 12%. In this case, I want you to assume that the present value of the tax shield associated with capital reinvestments is about 10% of the amount spent, which is projected to be $100,000 per year. As FCI is public, it would not be able to claim a small business deduction for OTE. I would say that FCI could expect to pay corporate tax at the rate of 30%. Wutang concludes: I'd like to make sure I understand what my company is worth before the offer is received.