Required: 

In Excel prepare a capitalized cash flow valuation for OTE, using the information provided in the exhibits. 

Exhibit I

Over The Edge Inc.

Balance sheet

As at December 31

Current year | Prior year

Cash $ 4,560 |$ 12,720

Investments — | 29,850

Accounts receivable 1,370,150 | 1,112,457

Income taxes receivable 36,160 | —

Inventory 1,196,190 | 938,945

Prepaids 4,920 | 4,920

TOTAL CURRENT ASSETS 2,611,980 | 2,098,892

Property, plant, and equipment 4,244,413 | 2,998,749

Intangible assets 13,883 | —

Due from shareholder 21,500 | 21,500

Total Assets $ 6,891,776 | $ 5,119,141

Demand bank loan $ 375,422 | $ 96,800

Accounts payable and accruals 1,409,932 | 1,175,915

Warranty accrual 315,231 | 259,412

Deferred revenue 156,500 | —

Current portion of term loan 141,000 | 141,000

Income taxes payable — | 11,700

2,398,085 | 1,684,827

Term loan 572,000 | 713,000

Other long-term liabilities 1,128,570 | —

Share capital 150,100 | 150,100

Retained earnings 2,643,021 | 2,571,214

TOTAL Liabilities and shareholder's equity $ 6,891,776 | $ 5,119,141 

Over The Edge Inc. Statement of income and retained earnings For the year ended December 31 

Current Year | Prior Year Sales

 $ 8,959,800 | $ 8,834,000 

Cost of sales 5,949,648 | 6,129,709 

Gross profit 3,010,152 | 2,704,291 

Expenses: 

Advertising and promotion 357,900 |  266,500 

Amortization 219,163 | 166,584 

Automobile 140,800 | 102,600 

Bad debts 17,250 | 19,110 

Donations 1,200 | 1,000 

Dues and fees 7,500 |  — 

Insurance 69,600 | 57,200 

Interest and bank charges 119,203 | 46,600 

Office 101,200 | 108,700 

Professional fees 67,700 | 34,800 

Property taxes 44,700 | 40,900 

Rent expense 84,654 | — 

Repairs and maintenance 207,100 | 155,100 

Salaries and wages 1,160,460 |  1,175,600 

Travel 117,666 | 103,900 

Utilities 67,600 |  60,200 

Warranty 72,059 | 69,482 

Income before taxes 154,397 | 296,015

Income taxes 33,840 | 76,754 

Net income 120,557 | 219,261 

Retained earnings, opening 2,571,214 | 2,360,953 

Dividends 48,750 |  9,000 

Retained earnings, closing $ 2,643,021 | $ 2,571,214