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Cash versus Stock Payment
Eastman Corp. is analyzing the possible acquisition of Kodiak Company. Both firms have no debt. Eastman believes the acquisition will increase its total after tax annual cash flows by $2.6 million indefinitely. The current market value of Kodiak is $102 million, and that of Eastman is $140 million. The appropriate discount rate for the incremental cash flows is 12 percent. Eastman is trying to decide whether it should offer 40 percent of its stock or $110 million in cash to Kodiak's shareholders.
a. What is the cost of each alternative?
b. What is the NPV of each alternative?
c. Which alternative should Eastman choose?
1. a company has a share price of 24.50 and 118 million shares outstanding. its book equity is 688 million its book
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You will analyze these two situations and develop preliminary plans to launch these products internationally. First you will need to establish your target market and offer opinions on the following questions:
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you borrowed some money at 8 percent per annum. you repay the loan by making three annual payments of 247 first payment
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