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A sporting goods manufacturer has decided to expand into a related business. Management estimates that to build and staff a facility of the desired size and to attain capacity operations would cost $450 million in present value terms. Alternatively, the company could acquire an existing firm or division with the desired capacity. One such opportunity is the division of another company. The book value of the division's assets is $250 million, and its earnings before interest and tax are presently $50 million. Publicly trade comparable companies are selling in a narrow range around 12times current earnings. These companies have book value debt-to-asset ratios averaging 40 percent with an average interest rate of 10 percent.
a. Using a tax rate of 34 percent, estimate the minimum price the owner of the division should consider for its sale.
b. What is the maximum price the acquirer should be willing to pay?
c. Does it appear that an acquisition is feasible? Why or why not?
d. Would a 25 percent increase in stock prices to an industry average price-to-earnings ratio of 15 change your answer to (c)? Why or why not?
e. Referring to the $450 million price tag as the replacement value of the division, what would you predict would happen to acquisition activity when market values of companies and divisions rise above their replacement values?
List key stages of a typical procurement cycle
Prepare a project Report - This indicates the major and minor sections and outlines the structure. It should also contain a list of diagrams, tables, charts and so on.
Explain most important aspect of project management.
What form of business organization would you choose for this venture, and why? Outline the advantages and disadvantages of each of the three major types of business in this particular context.
Discuss relevance of Re-Work in Project Management.
Masters Corp. has two bonds with 20-years remaining until maturity. Both bonds are unsecured and are callable at $1,050. Bond A was issued 20 years ago with a coupon rate of 6%. Bond B was issued 10 years ago with a coupon rate of 8%.
Describe the market growth rate for product and service.
What are the project communication methods
Recommend three actions that the project leader should take in order to identify and understand the technical challenges and issues facing the project
Create a project schedule and align resources, Analyze project schedule and resource allocation
Describe and compute the Designed Capacity and Effective Capacity - Find out and interpret the significance of each three elements in a project
You are the project manager of a leading textile engineering company. The company opened its door in year 2000. Today, after 13 years of existence, it is being challenged with a loss in profitability approximating a 65% loss in net revenue
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