Use your answers from Problems 17 and 18 to infer the value today of the projected improvements in working capital under the assumptions that Ideko’s market share will increase by 0.5% per year and that investment, financing, and depreciation will be adjusted accordingly.

Data from in Question 17

Using the APV method, estimate the value of Ideko and the NPV of the deal using the continuation value you calculated in Problem 13 and the unlevered cost of capital estimate in Section 19.4. Assume that the debt cost of capital is 6.8%; Ideko’s market share will increase by 0.5% per year until 2010; investment, financing, and depreciation will be adjusted accordingly; and the projected improvements in working capital occur.

Data from in Question 13

Using the information produced in the income statement in Problem 4, use EBITDA as a multiple to estimate the continuation value in 2010, assuming the current value remains unchanged (reproduce Table 19.15). Infer the EV/sales and the unlevered and levered P/E ratios implied by the continuation value you calculated.

Data from problem 4

Data from in Question 14

Data from in Question 18
Using the APV method, estimate the value of Ideko and the NPV of the deal using the continuation value you calculated in Problem 13 and the unlevered cost of capital estimate in Section 19.4. Assume that the debt cost of capital is 6.8%; Ideko’s market share will increase by 0.5% per year; investment, financing, and depreciation will be adjusted accordingly; and the projected improvements in working capital do not occur.

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4. Under the assumption that Ideko's market share will increase by 0.5% per year (and the in- vestment and financing will be adjusted as described in Problem 3), you project the following depreciation: Year 2005 2006 2007 2008 2009 2010 Fixed Assets and Capital Investment ($ 000) 2 New Investment 3 Depreciation 5,000 5,000 5,000 (5,500) (5,450) (5,405) 5,000 (5,365) 5,000 20,000 (5,328) (6,795)