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Mr. Z, CEO of Shoes Inc., has identified Laces Ltd. as a possible acquisition candidate and a good strategic fit for the organization. Laces Ltd. has $100 million in assets and $20 million in par-value debt on the books. It currently trades for $35 per share on the open market and has 3 million common shares outstanding.
The current fiscal year closed yesterday with Laces Ltd. earning $10.50 M before interest and taxes (EBIT). After allowing for changes in NWC, taxes, depreciation, and capital expenditures, Laces Ltd. had $7.59 M in debt-free cash flows (cash flow from assets). Analysts expect their CFA to grow at 20% for the next two fiscal years and then settle down to a 5% annual growth rate thereafter. Laces Ltd.'s investors demand a return of 15% for similar risk assets.
Using the WACC-DCF approach, how much should Shoes Inc. should be willing to pay per share to acquire Laces Ltd?
Chuck wants to earn 7.5% on his zero coupon bond that matures in 19 years. It has a face value of $1,000. What would he be willing to pay today?
The Elvis Alive Corporation, makers of Elvis memorabilia, has a beta of 2.35. The return on the market portfolio is 13%, and the risk-free rate is 7%. According to CAPM, what is the risk premium on a stock with a beta of 1.0?
What are brand equity and customer equity? What are the advantages and disadvantages of each?
If the risk-free rate is 4.50 percent and the expected return on the market is 12 percent, what is Dybvig's cost of equity capital?
What are the financial markets and what purposes do they serve and what are financial intermediaries? How do these intermediaries function in the economy?
You are offered the annuity which will pay you $9,000 at the end of each of next 10 years. What is maximum amount you would be willing to pay today for this annuity? (Suppose you require 15% rate of return on investment of this nature.)
Use the Du Pont system to calculate the return on assets for the two years, and determine why they changed.
Please compare and contrast acquisition indebtedness and home-equity indebtedness. Why might it be good advice from a tax perspective to think hard before deciding to quickly pay down mortgage debt?
Sony Company has never paid a dividend. The free cash flow is projected to be $40,000 & $50,000 for the next two years, & after 2nd year it is expected to grow at a constant rate of 6%.
You borrow $5,830 to buy a car. The terms of the loan call for monthly payments for 6 years a rate of interest of 7 percent. What is the amount of each payment?
Examine and evaluate the disparity of your state's budget allocation for education and property tax to the various localities.
Robin sold 800 shares of a non-dividend paying stock this morning for a total of $29,440. She had buy these shares on margin twelve months ago at cost per share of $35.
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