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Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter2: Financial Statements, Cash Flow,and Taxes
Section: Chapter Questions
Problem 21SP: Begin with the partial model in the file Ch02 P21 Build a Model.xlsx on the textbooks Web site. a....
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answer is Net Cash Flow: 59,468,971 and Reasonable Price: 9,893,794

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b 24. Unicap Company is opening its doors to investors and shared the
VALUATION CONCEPTS AND METHODOLOGIES
following prospective financial information:
2021
2022
10,000,000 12,000,000 14,000,000
2023
Revenues
2024
15,000,000
Cost of Goods Sold
5,000,000
6,000,000
7,000,000
7,500,000
Gross Profit
Selling and Distribution
5,000,000
6,000,000
1,200,000
1,000,000
7,000,000
7,500,000
Administrative
400,000
1,400,000
1,500,000
400,000
400,000
400,000
Depreciation Expense
2,000,000
2,000,000
2,000,000
2,000,000
Operating Income
Income Tax Expense
1,600,000
2,400,000
3,200,000
3,600,000
480,000
720,000
960,000
1,080,000
Net Profit
1,120,000
1,680,000
2,240,000
2,520,000
Required Annual
Capital Investment
1,000,000
1,000,000
1,000,000
1,000,000
XYZ, an equity capital venture company, is considering infusing
money to Unicap Company. Based on its assessment, cost of capital
associated with this type of investment is at 10%. Unicap Company
has going concern assumption with net cash flows expected to grow
by 5%. In addition to potential capital investment, Unicap Company
has outstanding debt of P10,000,000. What is the net cash flow to
the firm of Unicap Company?
a. Php70,958,800
b. Php59,468,971
C. Php54,879,120
a. Php50,488,355
4 25. Refer to Unicap Company. If XYZ Company is buying 20% of Unicap
Company, what is the reasonable price that they should pay?
a. Php49,468,971
b. Php17,096,000
C. Php11,893,794
d. Php9,893,794
Transcribed Image Text:b 24. Unicap Company is opening its doors to investors and shared the VALUATION CONCEPTS AND METHODOLOGIES following prospective financial information: 2021 2022 10,000,000 12,000,000 14,000,000 2023 Revenues 2024 15,000,000 Cost of Goods Sold 5,000,000 6,000,000 7,000,000 7,500,000 Gross Profit Selling and Distribution 5,000,000 6,000,000 1,200,000 1,000,000 7,000,000 7,500,000 Administrative 400,000 1,400,000 1,500,000 400,000 400,000 400,000 Depreciation Expense 2,000,000 2,000,000 2,000,000 2,000,000 Operating Income Income Tax Expense 1,600,000 2,400,000 3,200,000 3,600,000 480,000 720,000 960,000 1,080,000 Net Profit 1,120,000 1,680,000 2,240,000 2,520,000 Required Annual Capital Investment 1,000,000 1,000,000 1,000,000 1,000,000 XYZ, an equity capital venture company, is considering infusing money to Unicap Company. Based on its assessment, cost of capital associated with this type of investment is at 10%. Unicap Company has going concern assumption with net cash flows expected to grow by 5%. In addition to potential capital investment, Unicap Company has outstanding debt of P10,000,000. What is the net cash flow to the firm of Unicap Company? a. Php70,958,800 b. Php59,468,971 C. Php54,879,120 a. Php50,488,355 4 25. Refer to Unicap Company. If XYZ Company is buying 20% of Unicap Company, what is the reasonable price that they should pay? a. Php49,468,971 b. Php17,096,000 C. Php11,893,794 d. Php9,893,794
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