Private Company Valuation - EOC No 15 pg 585 with question detailed here.

[caparthtalsania]

Under Excess Earning MEthod why is solution not adding growth rate to balance income -28800000 to get it one year ahead and the n do ke - g ??? vs EOC 4 A part where they have added . ??? plz help …!!!!

Powell also recognizes that a value needs to be assigned to FAMCO’s intangibles consisting of patents and other intangible assets. Powell prepares an additional estimate of excess earnings and intangibles value using the capitalized cash flow method. He projects the following data for 2009:
FAMCO, Inc.—Intangibles Valuation Data
Working capital balance 10000000
Fair value of fixed assets 45000000
Normalized income to the company 35000000
Required return on working capital 8%
Required return on fixed assets 12%
Required return on intangible assets 20%
Weighted average cost of capital 14.5%
Future growth rate 6%

 

[kjsgbp]

I don’t have the question in front of me, but your example says “he projects.. for 2009”
Are the data already 1 year in the future?

 

[caparthtalsania]

In the beginning of EOC Financials are given as on 31.12.2008 at the beginning of this exihibit to calculate excess earning it says he projects for 2009 , still i dont get it coz how can other figures of wcap and fixed assets be one year ahead to calculate excess earnings ???