Solve using NPV method to valuation the company. It\'s a few years later. Despit
ID: 2462243 • Letter: S
Question
Solve using NPV method to valuation the company.
It's a few years later. Despite the fact that your initial projections were...shall we say... pixy dust, you've managed to build a company with an approved product in the market and a track record of revenue. You've got more war stories than Tim Keane and you've been invited back to speak to the CEAS Innovation and Commercialization class on several occasions. Your investors are looking for an exit, and you agree that the next logical step for the company may be to seek an acquisition so that you can tap into the established distribution network of a large medical device manufacturer. Table 2 shows your Profit and Loss Statement including actual performance for three years and projected performance for the next two years.Explanation / Answer
Paritculars 2016 2017 2018 2019 2020 Net profit 300,000 1,320,000 1,713,000 1,815,000 1,917,000 Discount factor 0.90909 0.82644 0.75131 0.68301 0.62092 Discount cashflow 272,727 1,090,901 1,286,994 1,239,663 1,190,304 NPV 5,080,589 Valuation 50,805,886.20 (5080588.62/10%)