How much would you be requesting from them

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Q1: White Inc. will be acquiring Clear Co. which provides a return on equity of 15%, growth rate of 3% and P48 per share as most recent dividends. White Inc. sees that the value of the outstanding 150,000 shares can be improved upon acquisition. It foresees to provide 16% return on equity, growth rate of 4% and a dividend of P52 one year from immediate acquisition. What would the value of control over Clear Co. be for White Inc?

Q2: You are preparing a valuation report on your business so that you can approach angel investors to finance your business. You foresee losses of P1,000,000 and P300,000 for the first and second years but earnings of P500,000 and P800,000 in the third and fourth years. From the 5th until the 20th year, you expect to have average earnings of P1,200,000. Based on the business risk exposures, you deem that a return of 22% is acceptable. If you are willing to have 30% of the value of the firm to be financed by these angel investors, how much would you be requesting from them?

Reference no: EM133056661

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