Should acme make a deal if its policy is to never exceed a

Assignment Help Finance Basics

Reference no: EM13394130

Acme is also considering the acquisition of a firm in the Czech Republic and would like your opinion on this. It plans to operate the firm for 3 years and then reevaluate the holding.

Free Cash flows are estimated as follows:
Year 1 - 38.63M Czech Koruna (CZK), Year 2 - 44.33 M CZK,
Year 3 - 50.48M CZK
The third year terminal value is estimated at 375M CZK.

The Czech Koruna's exchange rate is assumed to be .038 USD/CZK for each year. Acme uses a WACC of 13 % for its domestic projects. So, the PV of the FCF's for the firm is 363.78 M CZK or $13.82M. The Czech firm has 1,000,000 shares outstanding and a debt to equity ratio of 1:1. Current market price is 185 CZK per share.

All monetary information (except per share) should be presented in CZK millions (i.e., do not convert to USD).

1.Should Acme make a deal if its policy is to never exceed a 20% premium in any tender offer? To defend your position, you must prepare and present an Excel template that includes the calculated fair value premium over market.

2.What changes in the analysis or additional analysis do you suggest before a final decision should be made?

3.Using the DCF methodology required in question 1, please take one of your suggestions and reevaluate the buy-out. To complete this question, you will have to present a second Excel template that includes your new assumed values and supports your recommendations. Further, please comply with the following:

Assumptions must be reasonable – i.e., don’t select arbitrary values. Some discussion should be provided that explains how you arrived at your new assumed values.Variable changes should be restricted to the discount rate, the FCFs, and/or the terminal value. Please present only one set of assumptions.To demonstrate that you have successfully prepared the Excel template, no two students may use the same values. To help ensure that your values are unique, please use a minimum of three significant digits to the right of the decimal point.

Reference no: EM13394130

Questions Cloud

Find the difference in welfare between free trade and : your last assignment brings you to work with the government of sweden on textile markets. sweden is fully integrated

When searching for a supplier which of the following : 1.which group is experiencing the fastest population growth today?2.what is the second stage of the consumer buying

You have a product in which inventory is taken frequently : 1 in cases where demand is difficult to predict which probability models would you use so that the risk associated with

Haywood company sells a single product with a contribution : haywood company sells a single product with a contribution margin of 5 per unit fixed costs of 74400 and sales for the

Should acme make a deal if its policy is to never exceed a : acme is also considering the acquisition of a firm in the czech republic and would like your opinion on this. it plans

The us wants to make progress on free trade agreement and : the u.s. wants to make progress on this free trade agreement and argues that freer trade is necessary because the

Marketers must see themselves as benefit providers for : 1 marketers must see themselves as benefit providers. for example when a shopper purchases new shoes he or she expects

Describe the significance of the master production schedule : 1 what motivations typically cause firms to initiate a facilities location or relocation project? 2 how do facility

As a quality analyst you are also responsible for : as a quality analyst you are also responsible for controlling the weight of a box of cereal. the operations manager

User Account

All Pages