Discusses the main risk that biackspot ltd faces

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Reference no: EM132294207

Requirement:

Prepare a report for Blackspot Ltd that:

(a) Calculates the net present value (NPV) and the internal rate of return IRR of the above investment opportunity to purchase the new machinery, and advise Blackspot Ltd, on financial grounds, whether Or not they should pursue this investment.

(b) Discusses the main risk that BIackspot Ltd faces with regards to the investment opportunity, and suggests ways in which management could mitigate them.

(c) Calculate potential values of Glossover Ltd using each of the following methods:
I. Net asset method
II. P/E ratio method
III. The dividend growth model and advises Blackspot Ltd of a suitable initial offer price to make for Glossover Ltd.

(d) Discusses the advantages and disadvantages of each of the valuation
methods in part (c) above and explains the possible differences between the values calculated in part (c)

(e) Explains the relative benefit of a cash offer, and of a share-for-share exchange for Blackspot Ltd, and advises on what is the most suitable type of offer in this scenario.

Attachment:- Case Study.rar

Verified Expert

Mix-IT Co much accepts Project 1: Recycling Plant as it has a positive net present value which indicates higher cash inflows over the cash outflow in terms of the time value of the money. It will improve the worth of the investment of the company. The company should make an offer price of around £81.34 million for the acquisition of GlassCo Ltd.

Reference no: EM132294207

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