e space provided 1. Mulligan Motors Corporation jus t released its results for t

Question

e space provided 1. Mulligan Motors Corporation jus t released its results for the most recent two years: Balance Sheet Assets Cash Short-Term Investments Accounts Receivable Inventories Total Current Assets Gross Fixed Assets 2016 2017 8,200.00 10,985.80 7,800.006,400.00 $12,500.00 17,000.00 S 16,000.00 S 20,0s0.00 $44,500.00 $ 54,435.80 95,200.00 132,800.00 Less: Accumulated Depreciation $ 25,400.00 45.320 Net Fixed Assets Total Assets $ 69,800.00 $ 87,480.00 $ 114,300.00 $ 141,915.80 Liabilities and Equity Accounts Payable Notes Payable Accruals Total Current Liabilities Long-Term Debt Common Stock Retained Earnings Total Equity Total Liabilities and Equity 6,850.00 5,250.00 $ 12,500.00 $ 8,500.00 $ 4,150.00 9,250.00 s 23,500.00 23,000.00 $ 35,000.00 40,000.00 $ 10,000.00 9,000.00 $ 45,800.00 $ 69,915.80 55,800.00 78,915.80 141,915.80 $ 114,300.00 2016 2017 Income Statement Sales Cost of Goods Sold Other Expenses Depreciation Total Operating Costs EBIT Interest Expense EBT $ 132,100.00 $ 162,500.00 $63,408.0078,000.00 $13,210.00 16,250.00 $14,280.00 19,920.00 $ 90,898.00 114,170.00 41,202.00 48,330.00 $3,562.00 3,637.00 37,640.00 44,693.00 $15,056.00$17,877.20 Taxes (40%) $ 22,584.00$ 26,815.80 Net Income

Explanation / Answer

FCFF = earnings before interest and taxes x (1 - tax rate) + depreciation - long-term investments - investments in working capital =

long-term investments = change in fixed assets

After tax interest payments

2182

Dividends = 0, since none mentioned

net stock repurchases = decrease in common equity = 10000 - 9000 = 1000

net purchase of short term investments = increase in short term investments = 6400-7800 = 1400

Firm value = FCFF (1+ growthrate) / (WACC - growth rate)

= -1300 ( 1+ 10%) / (12% - 10%) = -71,500

Net debt = 35,000

Equity value = Firm value - Net debt = -71500 - 35000 = -106500

per share value = -106500/9000 = -11.8

EBIT      44,693.0 tax rate 40% EBIT * (1 - tax rate)      26,815.8 Depreciation      19,920.0 long-term investments      37,600.0 =132800-95200 investments in working capital      10,435.8 =(54435.8-44500)-(23000-23500) FCFF      (1,300.0)

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