Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Merger Bid
Point 1: Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.10 (given its target capital structure). Vandell has $8.84 million in debt that trades at par and pays an 7.8% interest rate. Vandell's free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 6% a year. Both Vandell and Hastings pay a 30% combined federal and state tax rate. The risk-free rate of interest is 7% and the market risk premium is 8%.
Point 2: Hastings Corporation estimates that if it acquires Vandell Corporation, synergies will cause Vandell's free cash flows to be $2.3 million, $3.0 million, $3.4 million, and $3.87 million at Years 1 through 4, respectively, after which the free cash flows will grow at a constant 6% rate. Hastings plans to assume Vandell's $8.84 million in debt (which has an 7.8% interest rate) and raise additional debt financing at the time of the acquisition. Hastings estimates that interest payments will be $1.6 million each year for Years 1, 2, and 3. After Year 3, a target capital structure of 30% debt will be maintained. Interest at Year 4 will be $1.414 million, after which the interest and the tax shield will grow at 6%.
Question 1: Indicate the range of possible prices that Hastings could bid for each share of Vandell common stock in an acquisition. Round your answers to the nearest cent. Do not round intermediate calculations.
John Baron, a professional baseball player, raises Black Angus cattle under circumstances that would indicate that the activity is a hobby. His adjusted gross income for the year is $50,000, and he has $500 of other miscellaneous itemized deductions,..
Describe a person (famous or not) who you consider to be an entrepreneur. You do not have to name the person if this is a personal reference. Thinking about this person what makes them an entrepreneur? What skills do they have that sets them apart fr..
Select one of the following two machines using Future Worth Analysis and an interest rate of 8%. Description Machine LX Machine NT First Cost, $ -41,000 -36,500 Annual Operating Cost, $/year -3,800 -5,600 Overhaul in year 2, $ -2,900 - Overhaul in ye..
tyro co. uses a standard cost system. the subsequent information pertains to direct labor for product b for the month
Gordon Company produces a variety of electronic products. One of its plants produces two laser printers, Express and Enterprise. At the beginning of 2013, the following data were prepared for this plant: Using the projected data based on the firm's c..
Purpose a partial income statement beginning with Income before Income Tax Expense
Ted is a successful attorney, but when he turned 50 years old he decided to retire from his law practice and become a professional golfer. Ted has been a very successful amateur golfer, so beginning this year Ted began competing in professional golf ..
Chuck, a single taxpayer, earns $168,000 in taxable income and $21,750 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.) What is his marginal rate if, instead, he had $47,250 of additional deductions?
What is the usual order in which financial statements are prepared from the adjusted trial balance? Why are they prepared in that order?
Pacific Ink had beginning work-in-process inventory of $760,000 on October 1. Of this amount, $305,920 was the cost of direct materials and $454,080 was the cost of conversion.The 49,000 units in the beginning inventory were 30 percent complete with ..
Max Points: 5.0 choose a publicly traded company, and review its statement of cash flows. Provide a link to the statement in your post. Do not choose a company about which one of your classmates has already posted. Calculate the cash flow ratios pres..
Ellson Electronics Company manufactures video cassette recorders, which it sells for $300 per unit. Variable costs are $210 per unit, and fixed costs are $630,000 a year. The tax rate is 40%. How many VCRs must be sold each year for the firm to break..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd