Determining the percent stake in the bakery

Assignment Help Finance Basics
Reference no: EM131987071

Based on its growth prospects, a private investor values a local bakery at $850,000. She believes that cost savings having a present value of $40,000 can be achieved by changing staffing levels and store hours. Based on recent empirical studies, she believes the appropriate liquidity discount is 25 percent. A recent transaction in the same city required the buyer to pay a 6 percent premium to the asking price to gain a controlling interest in a similar business. What is the most she should be willing to pay for a 50.1 percent stake in the bakery?

Reference no: EM131987071

Questions Cloud

Value of siebel using the dcf method : a. What is the value of Siebel using the DCF method? b. What is the value using the comparable recent transactions method?
Table with numbers in visualization to large audience : Suppose you must include a table with numbers in a visualization to a large audience. What's the one thing listed below that you should not do to it?
Prepare the current assets section of aramis company : Prepare the current assets section of Aramis Company's December 31, 2012, balance sheet, with appropriate disclosures
Measure for ranking series of project proposals : Profitability index is a better measure for ranking a series of project proposals than Net Present Value. Agree or disagree, and why.
Determining the percent stake in the bakery : What is the most she should be willing to pay for a 50.1 percent stake in the bakery?
Calculate the amount of overhead : Calculate the amount of overhead that would be allocated to these two projects on a labor hour and a dollar basis
Lower expected rate of return than corporate bonds : Preferred stock sometimes offers a lower expected rate of return than corporate bonds. Agree or disagree, and why.
Find three relevant facts about the company : Find three relevant facts about the company that will be good to know for your interview.
What present value and future value are in you own words : Explain what Present Value and Future Value are in you own words. What is the difference between the Present Value of $ and the Present Value of an Annuity?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the outstanding principal

At the end of three years, you have inherited a small fortune from a long-lost relative. You have decided to pay out the loan.

  Annual ground coffee expenditures for househols

In a recent year, about 2/3 of US houiseholds purchased group coffee. Consider the annual ground coffee expenditures for househols purchasing.

  He state view corporation has made an investment

He State View Corporation has made an investment of $90,000 that is expected to yield benefits over a nine-year period.  Annual cash inflows of $110,395 and annual cash outflows of $75,000 are expected excluding taxes and depreciation.  The ta..

  What is the active power actually supplied by the generator

What is the active power actually supplied by the generator in comparison to that supplied to the load?

  Beaksley, inc. is a very cyclical type of business

Beaksley, Inc. is a very cyclical type of business which is reflected in their dividend  policy. The firm pays a $2.00 a share dividend every other year. The last dividend was  paid last year. Five years from now, the company is repurchasing all o..

  Suppose you plan to retire in 40 years if you make 10

suppose you plan to retire in 40 years. if you make 10 annual investments of 1000 into your retirement account for

  What is campus net working capital

Accrued wages and taxes = $11,900, Accounts payable = $319,000, and Notes payable = $619,000. What is Campus's net working capital?

  When an institution has sold exposure to another

when an institution has sold exposure to another institution i.e. purchased protection in a cds it has exchanged the

  What are the expected cash receipts for march

If 20% of sales are for cash, 40% are credit sales paid in the month after the sale, and another 40% are credit sales paid 2 months after the sale, what are the expected cash receipts for March?

  Calculate covariance between the returns of stock a and b

Given the returns and probabilities for the three possible states listed here, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns of Stock A and Stock B are 0.13 and 0.18, respect..

  Cost of capital-capital budgeting

Pine Tree Farms Corporation (PTFC) has a target capital structure of 40% debt, 10% preferred stock, and 50% common stock. Currently PTFC has a capital structure of 75% debt, 10% preferred stock, and 15% common stock.

  Describe any pitfalls the firms encountered

Describe any pitfalls the firms encountered and how the problems were resolved.

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd