Solution-Consider the following data for abc enterprises

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Consider the following data for ABC enterprises (all numbers in €):

Today is January 1, 2013
Income statement for 2012 shows:
- Revenues for 500,000
- Cost of Goods sold: 350,000
- General & Administrative Costs 25,000
Applicable tax rate = 35%
Investment in working capital for 2013 is expected to amount to 20,000 and capex will be 40,000.
Depreciation that same year has been estimated at 15,000.
Evolution of the above magnitudes is expected to be the following:
- Revenues is expected to grow at a rate of 5% until 2017
- Cost of goods sold: 70% of revenues
- G&A costs: 5% of revenues
- Investment in working capital is expected to grow at a rate of 5% until 2017
- Both CAPEX and depreciation are expected to follow the same growth rates which are: 4% until 2015 and 2% the two years after that.

With respect to the cost of capital, available data is the following:

The firm's balance sheet shows 200,000 in financial debt which bears an interest rate of 5% and 500,000 in equity.
Industry's average unlevered beta = 1.13
Market risk premium = 7%
Government bond with 20 years´ maturity stands at 3%

Forecast cash flows for 2013 - 2017, estimate the Residual Value and perform the corresponding firm valuation.

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