Information for Business Valuation

A$.$ Inputs at the Time of Valuation $($t $=0)$

Revenue $-$ $$20000$

NWC $-$ $$3705$

GPPE $-$ $$10000$

B$.$ Forecasts for the Finite Horizon $($Years $1$ to $5)$

Revenue Growth $-5\%$

COGS$/$Revenue $-30\%$

SG&A$/$Revenue $-10\%$

NWC$/$Revenue $-17\%$

Annual Depreciation $-$ $$1000$

Annual Increase in GPPE $-$ $$250$

C$.$ Forecasts for the Infinite Horizon $($Starting in Year $6)$

Annual Growth Rate $-7\mathrm{.}5\%$

D$.$ Other Information

Tax Rate $-27\%$

Cost of Capital $-15\mathrm{.}95\%$

Use cell references to enter all input values necessary for the valuation analysis. Assume an input value to be zero when there is no applicable information.

Add $$spin button$($see below for an example$)$ in the input value for Revenue $($t $=0)$ with an incremental change of $$2,000$ to make the input interactive. All calculations tied to Revenue should change when the input value of Revenue is adjusted.

Use the Excel formula to complete all necessary calculations in the valuation table. Your estimate of the business value should appear in the cell highlighted in yellow.

Present your calculations in the analysis report as follows.

a$.$ A line item in the report is shown as $-$ where there is no applicable information or it is equal to $0.$

b$.$ A line item labeled with $$Add:$$ or $$Less:$$ must be included in all relevant calculations even if there is no applicable information for the item or it has a value of $0.$ The $5$ associated cells for the line should show the values used in the calculations instead of the values after the calculations $($i$.$e$.,$ adding or subtracting$).$

Enter your recommendation on the sales of the business in the bottom cell; that is$,$ would you recommend your client to sell the business at a price of $$80,000$ offered by a potential buyer based on your analysis?