Enterprise Valuation Cash Flow = EBIT x ( 1 - Enterprise Tax Rate)

a. EBIT (1 - 0.3) = $280000

b. Depreciation and Amortization Exp = $40,000
c. Change in NOWC = 135000 - 50000 = $85000
d. CAPEX = $150000

Enterprise Valuation Cash Flow = a + b - c - d

Cash Flow = EBIT x ( 1 - Enterprise Tax Rate)
+ Depreciation and Amortization Expense
- Change in NOWC
- CAPEX

Amortization Exp = $40,000

= 135000 - 50000 = $85000

Cash Flow = a + b - c - d
= $85000
Current Asset: Year 2016 Year 2017
Required Cash 50000 75000
Surplus cash 20000 40000
Account Receivable 200000 250000
Inventories 300000 360000
550000 685000
Current Liabilities:
Account Payable 100000 120000
Accrued Liabilities 40000 50000
Bank loan (short term) 90000 110000
230000 280000
 25000
20000
50000
60000
135000

20000
10000
20000
50000