Consider the financial statements below for media motors

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Reference no: EM13381930

Consider the financial statements below for Media Motors. The firm's cost of capital is 10%. The firm is stable, and the long-term growth rate for all items is expected to be 4%. Their CEO's name is Ray Charles. Use the information below to estimate the fair market value of MM's equity as of year-end 2013.

2013 Income Statement
Sales	500
Cost of goods sold	250
SG&A expense	50
EBIT	200
Interest expense	40
Taxable income	160
Taxes	64
Net Income	96

2012 Balance Sheet
Cash	50	Accounts payable	70
Accounts receivable	100	Total current liab.	70
Inventory	200
Total current assets	350	Long-term debt	400

Gross fixed assets	1,000	Common stock	200
Accumulated depreciation	200	Retained earnings	480
Net fixed assets	800	Total equity	680
Total	1,150	Total	1,150

2013 Balance Sheet
Cash	70	Accounts payable	100
Accounts receivable	130	Total current liab.	100
Inventory	220
Total current assets	420	Long-term debt	450

Gross fixed assets	1,120	Common stock	250
Accumulated depreciation	270	Retained earnings	470
Net fixed assets	850	Total equity	720
Total	1,270	Total	1,270

Reference no: EM13381930

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