ASSUMPTIONS:

1. Industry beta is 0.80 2. Tax rate is 40% 3. Risk free rate is 5 % 4. risk premium is 10% 5. sales 5 million footballs for the first year 40% next 3 years 15% for two years and then 10 % forever. 6. sales price 80 and grow at 10% 7. cost is 45 and grow at 8 % per annum 8. Expense related with selling and admin excluding depreciation are 15% of sales each year. 9. Interest expense will be 8.5% of total debt at the beginning of each year. 10. Each year the target cash balance will be 2 % of sales. 11. All sales will be made on credit and A/c receivable will be 10% each year. 12. The company will not have raw material and work in progress inventory. They have finished good inventory. 13. Raw material and WIP is assumed to be zero each year finished good inventory will equal 10% of next year sales unit. The FIFO method will be used for recording and reporting finished goods inventory. 14. The closing balance of A/c payable each year will equal to 5% of cost of good sold. 15. Land will not be depreciated or valued. 16. Building will be depreciated at 5 % annually and capital expenditure on building will equal the total amount of depreciation. 17. Investment in Plant and Machinery will equal to 15 % of sales in year 2-4 and onward investment in plant & Machinery will be 8 % of sales forever. 18. Depreciation of Plant and Machinery will takes place at 20% of its beginning value each year. 19. Motor vehicle will be depreciated at 20% each year for 5 Years (book value) and are planned to be replaced at the end of 5th year and at a cost of 4.5 million. 20. The company will follow residual dividend policy where additional funds needed for growth will be first finance provided through retained earnings and any remaining profit will be distributed to share holders as dividend.