I NEED STEP BY STEP EXPLANATIONS FOR THE COMPLETE QUESTION. PLEASE DO NOT SKIP ANY PARTS AND ANSWER THE COMPLETE QUESTION

Problem 3

Consider the following recent financial statements for the Philadelphia Pretzel Company:

2016 Income Statement
Sales	2,000
COGS	1,500
EBIT	500
Interest expense	20
Taxable income	480
Taxes	192
Net Income	288

2016 Balance Sheet
Cash	0		Accounts payable	150
Accounts receivable	100		Total current liabilities	150
Inventory	200
Total current assets	300		Long-term debt	275
			Common stock	100
Fixed assets	700		Retained earnings	475
Total	1000		Total	1000

2016 Statement of Cash Flows
Operating activities:
Net Income	288
Depreciation	70
Change in accounts receivable	30
Change in inventory	(60)
Change in accounts payable	20
Cash flow from operating activities	348
Investing activities:
Capital expenditures	(250)
Cash flow from investing activities	(250)
Financing activities
Repayment of borrowing	(18)
Cash flow from financing activities	(18)

(a) Assuming that the firms future cash flow will grow at 6% per year and their cost of capital is 16%, estimate the fair market value (i.e., the enterprise value) of PPC as of year-end 2016.

(b) Estimate PPCs stock price, if there are 200 shares outstanding.