Problem Set #1 - SPREADSHEET VALUATION PROBLEM [Venture...

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SPREADSHEET VALUATION PROBLEM [Venture Present Value Concepts] The EMC Corporation has been in operation for one full year (2010). Financial statements follow. EMC’s management is interested in determining the value of the venture as of the end of 2010. Sales are expected to grow at a 20 percent annual rate for each of the next three years (2011, 2012, and 2013) before settling down to a long-run growth rate of 7 percent annually. The cost of goods sold is expected to vary with sales. Operating expenses are expected to grow at 75 percent of the sales growth rate (i.e., be semi-fixed) for the next three years before again growing at the same rate as sales beginning in 2014. Individual asset accounts are expected to grow at the same rate as sales. Depreciation can be forecasted either as a percentage of sales or as a percentage of net fixed assets (since net fixed assets are expected to grow at the same rate as sales growth). Accounts payable and accrued liabilities are also expected to grow with sales.
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This note was uploaded on 04/05/2012 for the course FIN 4350 taught by Professor Ed during the Spring '12 term at University of Texas at Dallas, Richardson.

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Problem Set #1 - SPREADSHEET VALUATION PROBLEM [Venture...

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