ABC Enterprises Finance Assignment Help With Solution

Consider the following data for ABC enterprises (all numbers in €):

• Today is January 1, 2013

• Income statement for 2012 shows:
o Revenues for 500,000
o Cost of Goods sold: 350,000
o Selling, General & Administrative Costs: 25,000

• Applicable tax rate = 35%

• Investment in working capital for
2013 is expected to amount to 20,000 and capex will be 40,000.

• Depreciation that same year has been estimated at 15,000.

• Evolution of the above magnitudes is expected to be the following:
o Revenues are expected to grow at a rate of 5% until 2017
o Cost of goods sold: 70% of revenues
o G&A costs: 5% of revenues
o Investment in working capital is expected to grow at a rate of 5% until 2017
o Both CAPEX and depreciation are expected to follow the same growth rates which are: 4% until 2015 and 2% the two years after that.

With respect to the cost of capital, available data is the following:

• The firm’s balance sheet shows 200,000 in financial debt which bears an annual interest rate of 5% and 500,000 in equity.

• Industry’s average unlevered beta = 1.13

• Market risk premium = 7%

• Government bond with 20 years´ maturity stands at 3%

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Please, forecast cash flows for 2013 – 2017, estimate the Residual Value and perform the corresponding firm valuation.

Product Code :Fin149

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