Utica Manufacturing Company is expected to have a revenue of $500,000 in 2022 with a cost of $100,000. The administrative expense is expected to be $80,000. At the end of 2021, the account receivable was $100,000; the inventory was $200,000; and the account payable was $50,000. By the end of 2021, the account receivable is expected to be $110,000; the inventory is expected to be $180,000; and the account payable is expected to be $60,000. It is expected that $200,000 will be spent in equipment purchase in 2022, and the depreciation for the year will be $100,000. Cash flows are expected to grow at 6% per year after 2022. The appropriate cost of capital for unleveraged cash flow is 15% per year. The firm has no outstanding debt. The firm's corporate tax rate is 30%. 

What is the value of the firm based on discounted cash flow approach? Assuming you are estimating at the beginning of 2022.

Answer rating: 100% (QA)

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