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3, ENTERPRISE VALUATION: In the summer of 2010, smidgeon industries was evaluating whether or not to 1 answer below » 3, ENTERPRISE VALUATION: In the summer of 2010, smidgeon industries was evaluating whether or not to purchase one of its suppliers, the supplier, Carswell Manufacturing, provides Smidgeon with the raw steel Smidgeon uses to fabricate utility trailers. One of the first things that Smidgeons management did was to forecast the cash flows of Carswell for the next five years: Year cash flows 1 1,200,000 2 1,260,000 3 1,323,000 4 1,389,150 5 1,258,608 Next, Smidgeons management team looked at a group of similar firms and estimated Carswells cost of capital to be 15%. Finally, they estimated that View complete question » 3, ENTERPRISE VALUATION: In the summer of 2010, smidgeon industries was evaluating whether or not to purchase one of its suppliers, the supplier, Carswell Manufacturing, provides Smidgeon with the raw steel Smidgeon uses to fabricate utility trailers. One of the first things that Smidgeons management did was to forecast the cash flows of Carswell for the next five years: Year cash flows 1 1,200,000 2 1,260,000 3 1,323,000 4 1,389,150 5 1,258,608 Next, Smidgeons management team looked at a group of similar firms and estimated Carswells cost of capital to be 15%. Finally, they estimated that Carswell would be worth approximately six times its year 5 cash flow in fine years. a. What is your etimate of the enterprise value of Carswell? ASK THIS QUESTION … View less » Sep 17 2015 05:20 PM
