1. Estimate a venture’s equity valuation cash flow based on the following information: revenue = $24,475, net income = $6,372; depreciation = $4,600; change in net operating working capital = $2,415 (a source of cash); capital expenditures = $6,900; and new debt issues = $1,000.
a. $6,487
b. $7,487
c. $4,487
d. $3,787
e. $5,787
2. Estimate a venture’s terminal value based on the following information: current year’s net sales = $500,000; next year’s expected cash flow = $16,000; constant future growth rate = 4%; and venture investors’ required rate of return = 20%.
a. $156,846
b. $285,714
c. $200,000
d. $150,000
e. $100,000