Madison Deers Troopers, LLC (MDT), is a fledgling US-based hedge fund having slightly more than $50...

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Madison Deers Troopers, LLC (MDT), is a fledgling US-based hedge fund having slightly more than $50 million in assets under management. MDT specializes in owning and managing small-sized properties in agriculture, forestry, and mining. Giannis Frig. MDT's merger and acquisition (M&A) analyst is evaluating Whitewater Hawkes Farm, Inc. (WHF) for a potential acquisition. WHF owns 1,500 acres of fertile land, farm buildings, machinery, residential quarters, livestock, cattle feed, seeds, grain, significant amounts of intangible assets, and so on. Selected data from WHF's income statement for the year ended December 2019 and additional estimates compiled by Frig are presented in Exhibits 1 and 2. Exhibit 1 - FDP's Select Financisi Data for The Year Ended December 2019 Gross revenues from crops, livestock, feed, and so on Cost of goods sold $3,500,659 1,134,501 Selling, general, and administrative expenses (SG&A) 842,866 Depreciation and amortization 194,113 Tax rate 32% Notes: 1. WHF carries debt in the amount of $704,149 at an interest rate of 8%, and it comprises 27% of total assets on a book value basis. Debt will be a part of the acquisition transaction. 2. WHF holds $192,505 in cash and short-term investments, but it will not be a part of the assets under acquisition transaction. Exhibit 2 - Addítional Data and Frig's Estimates for Normallzation 1. The cost of goods sold ratio should be higher at 41%. 2. SG&A includes $400,000 in owners' compensation. According to Frig's research, owners' compensation expense for similar-sized farms is $209,916. 3. A ranch and living quarters are not required for the farm's core operations. The reported SG&A expenses include $149,586 for operating expenses relating to those properties. The ranch and living quarters will be kept by the current owners and are not a part of WHF's farming operations being considered for purchase by the hedge fund. 4. For pro forma estimations, Frig will consider depreciation and amortization at 11% of gross revenues. He thinks the current tax rate of 32% is reasonable. Using the company's data and Frig's assessments and estimates in Exhibits 1 and 2, WHF's normalized operating income after taxes for 2019 is closest to what number? Please round your answer to the nearest integer. Madison Deers Troopers, LLC (MDT), is a fledgling US-based hedge fund having slightly more than $50 million in assets under management. MDT specializes in owning and managing small-sized properties in agriculture, forestry, and mining. Giannis Frig. MDT's merger and acquisition (M&A) analyst is evaluating Whitewater Hawkes Farm, Inc. (WHF) for a potential acquisition. WHF owns 1,500 acres of fertile land, farm buildings, machinery, residential quarters, livestock, cattle feed, seeds, grain, significant amounts of intangible assets, and so on. Selected data from WHF's income statement for the year ended December 2019 and additional estimates compiled by Frig are presented in Exhibits 1 and 2. Exhibit 1 - FDP's Select Financisi Data for The Year Ended December 2019 Gross revenues from crops, livestock, feed, and so on Cost of goods sold $3,500,659 1,134,501 Selling, general, and administrative expenses (SG&A) 842,866 Depreciation and amortization 194,113 Tax rate 32% Notes: 1. WHF carries debt in the amount of $704,149 at an interest rate of 8%, and it comprises 27% of total assets on a book value basis. Debt will be a part of the acquisition transaction. 2. WHF holds $192,505 in cash and short-term investments, but it will not be a part of the assets under acquisition transaction. Exhibit 2 - Addítional Data and Frig's Estimates for Normallzation 1. The cost of goods sold ratio should be higher at 41%. 2. SG&A includes $400,000 in owners' compensation. According to Frig's research, owners' compensation expense for similar-sized farms is $209,916. 3. A ranch and living quarters are not required for the farm's core operations. The reported SG&A expenses include $149,586 for operating expenses relating to those properties. The ranch and living quarters will be kept by the current owners and are not a part of WHF's farming operations being considered for purchase by the hedge fund. 4. For pro forma estimations, Frig will consider depreciation and amortization at 11% of gross revenues. He thinks the current tax rate of 32% is reasonable. Using the company's data and Frig's assessments and estimates in Exhibits 1 and 2, WHF's normalized operating income after taxes for 2019 is closest to what number? Please round your answer to the nearest integer.

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