Assume that our client, GeekTech is considering purchasing the software firm, All-in-One Solutions. All-in-One Solutions is...

 

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Assume that our client, GeekTech is considering purchasing the software firm, All-in-One Solutions. All-in-One Solutions is a software firm with an excellent track record and an established line of software products that is publicly traded. All-in-One Solutions' marginal tax rate is 30%, and they plowback 30% of their Net Income into the firm with the remaining 70% being distributed to their shareholders as dividends. All-in-One Solutions' growth in CFFA is constant at 4.00% annually. Their dividends grow at the same constant rate and are issued annually. Their current dividend is $3.00 per share. All-in-One Solutions is financed with both publicly traded equity and corporate debt traded publicly, as well. Their corporate bonds are all traded in $1,000 increments and were issued at 6.00% annually for 20 years. Currently, one year later, they are trading for $1,200 per bond. Finally, their equity is currently trading at $50.00 per share. First, you are to create the necessary Balance Sheets and Income Statement for All-in-One Solutions and then calculate their annual Cash Flow from Assets (aka: CFFA or Free Cash Flows (FCF)). A constraint here, however, is that your CFFA (aka: CFFA) must range between $50,000,000 and $75,000,000 annually. A concise set of financial statements and calculations are satisfactory here as GeekTech understands how cash flow from assets are calculated at this point. Second, after calculating All-in-One Solutions CFFA, you are to estimate the value of this publicly traded firm. Make sure to explain the entire process of valuation as well as providing the valuation of the All-in-One Solutions. Assume that our client, GeekTech is considering purchasing the software firm, All-in-One Solutions. All-in-One Solutions is a software firm with an excellent track record and an established line of software products that is publicly traded. All-in-One Solutions' marginal tax rate is 30%, and they plowback 30% of their Net Income into the firm with the remaining 70% being distributed to their shareholders as dividends. All-in-One Solutions' growth in CFFA is constant at 4.00% annually. Their dividends grow at the same constant rate and are issued annually. Their current dividend is $3.00 per share. All-in-One Solutions is financed with both publicly traded equity and corporate debt traded publicly, as well. Their corporate bonds are all traded in $1,000 increments and were issued at 6.00% annually for 20 years. Currently, one year later, they are trading for $1,200 per bond. Finally, their equity is currently trading at $50.00 per share. First, you are to create the necessary Balance Sheets and Income Statement for All-in-One Solutions and then calculate their annual Cash Flow from Assets (aka: CFFA or Free Cash Flows (FCF)). A constraint here, however, is that your CFFA (aka: CFFA) must range between $50,000,000 and $75,000,000 annually. A concise set of financial statements and calculations are satisfactory here as GeekTech understands how cash flow from assets are calculated at this point. Second, after calculating All-in-One Solutions CFFA, you are to estimate the value of this publicly traded firm. Make sure to explain the entire process of valuation as well as providing the valuation of the All-in-One Solutions.