Following are financial statements (historical and forecasted) for the Global Products Corporation.

A. Assume that the cash account includes only required cash. Determine the dollar amount of equity valuation cash flow for 2011.
B. Now assume that Global Products€™ required cash is set at 3 percent of sales. Any additional cash would be surplus cash. Re-estimate the dollar amount of equity valuation cash flow for 2011.
C. Let€™s assume that investors in Global Products want to estimate the venture€™s present value at the end of 2010. Forecasted financial statements reflect the stepping-stone year. Cash flows are expected to grow at a perpetual 8 percent annual rate beginning in 2012. Assume that all cash is required cash as was done in Part A. What is Global Products€™ present value if investors want an annual rate of return of 25 percent?
D. Work with the assumptions in Part B about Global Products€™ required cash being 3 percent of sales. Calculate the present value of the Global Products venture at the end of 2010 if investors want an annual rate of return of 25 percent and cash flows are expected to grow at a perpetual 8 percent annual rate beginning in2012.

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GLOBAL PRODUCTS CORPORATION 2010 FORECAST 2011 Cash Accounts receivable Inventories S 50,000 200,000 450,000 700,000 300,000 1,000,000 140,000 50,000 S 60,000 290,000 570,000 920,000 380,000 $1,300,000 180,000 70,000 90,000 340,000 550,000 50,000 200,000 60,000 $1,300,000 S1,600,000 960,000 640,000 160,000 150,000 55,000 275,000 55,000 220,000 88,000 S 132,000 Total current assets Fixed assets, net Total assets Accounts payable Accruals Bank loan Total current liabilities Long-term debt Common stock ($1 par value Capital surplus Retained eamings 270,000 400,000 50,000 200,000 80,000 $1,000,000 $1.300,000 780,000 520,000 130,000 150,000 40,000 200,000 45,000 155,000 Total liabilities and equity Net sales Cost of goods sold Gross profit Marketing General and administ rative Depreciation Eamings before interest and taxes Eamings before taxes Net income Interest Income taxes (40% rate) S 93,000