The following are the information that relate to the cash flow statement of the company:
Operating Activities
Net Income ($ 95,136)
Adjustments: Depreciation 116,960 Change in AR (280,960) Change in inventories (572,160) Change in AP 178,400 Change in accruals 148,960
Net cash provided (used) by ops. ($503,936)
Investing Activities
Cash used to acquire FA ($711,950) Change in S-T invest. 28,600
Net cash prov. (used) by inv. act. ($683,350)
Financing Activities
Change in notes payable $ 520,000 Change in long-term debt 676,568 Payment of cash dividends (11,000)
Net cash provided (used) by fin. act. $1,185,568
Tax rate is 40% and the inflation rate is 3.5%
1. Using the WACC 12%, determine the continousing value in terminal year in the free cash flow growth rate of 4.5%.
2. Using the Mid Year discounts rate and WAAC 12%. Determine the intrinsic enterprise value.