Annual free cash flow would justify this acquisition price

Assignment Help Financial Management

Reference no: EM131890388

Kenneth Cole Productions (KCP) was acquired in 2012 for a purchase price of $ 14.84 per share. KCP had 18.1 million shares outstanding, $ 43.6 million in cash and no debt at the time of the acquisition. a. Given a weighted average cost of capital of 10.9 % and assuming no future growth, what level of annual free cash flow would justify this acquisition price? b. If KCP's current annual sales are $ 478 million, assuming no net capital expenditures or increases in net working capital, and a tax rate of 40% what EBIT margin does your answer in part(a)require.

a. Given a weighted average cost of capital of 10.9 % and assuming no future growth, what level of annual free cash flow would justify this acquisition price? The level of annual free cash flow that would justify this acquisition price is $million. ?(Round to two decimal places.)

Reference no: EM131890388

Questions Cloud

Example of a genetically modified organism : This may be a plant or an animal and may currently be on the market, was on the market in the past, or is under development.

Write a paper describing advantages of freebsd over windows : Write 3 page word document describing the Advantages of FreeBSD over Windows. The paper should be APA format.

When deciding whether to invest in new manufacturing plant : Which of the following should be treated as incremental cash flows when deciding whether to invest in a new manufacturing plant?

Compare the structure of carbon dioxide and glucose : Compare the structure of carbon dioxide and glucose. What is present in the glucose molecule that is missing in the carbon dioxide molecule?

Annual free cash flow would justify this acquisition price : Given a weighted average cost of capital of 10.9 % and assuming no future growth, what level of annual free cash flow would justify this acquisition price?

Relation to identification of an individual : Explain the significance of a Variable number tandem repeat in relation to identification of an individual?

Direction of osmosis in the beaker : What was the direction of osmosis in the beaker labeled "100% distilled water"? Did the egg in this beaker burst?

Develop an appropriate communication plan : Define what a project methodology is giving few definitions from various authors and the role it serves in project management

The average return and standard deviation on asset : Suppose the average return on Asset A is 6.5 percent and the standard deviation is 8.5 percent and the average return and standard deviation on Asset B are 3.7

User Account

All Pages