Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Valuation of Merger Target
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt; its beta is 1.20 (given its target capital structure). Vandell has $9.86 million in debt that trades at par and pays an 7% interest rate. Vandell’s free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 4% a year. Vandell pays a 30% combined federal and state tax rate. The risk-free rate of interest is 4% and the market risk premium is 5%. Hastings’ first step is to estimate the current intrinsic value of Vandell.
What are Vandell’s cost of equity and weighted average cost of capital? Round your answer to two decimal places. Do not round intermediate calculations.
Cost of equity: %
WACC: %
What is Vandell's intrinsic value of operations? (Hint: Use the free cash flow corporate valuation model.) Round your answer to two decimal places. Do not round intermediate calculations.
$ million
What is the current intrinsic value of Vandell's stock? Round your answer to the nearest cent. Do not round intermediate calculations.
$ /share
Last year, the USD depreciated 2% in real terms versus MXN. Inflation in the US was 2% and inflation in Mexico was 7%. In nominal terms, the USD approximately
Dylon Corp.'s bonds currently sell for $1,180 and have a par value of $1,000. They pay a $60 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to maturity (YTM)?
Suppose a company will issue new 25-year debt with a par value of $1,000 and a coupon rate of 8%, paid annually. The tax rate is 40%. If the flotation cost is 3% of the issue proceeds, then what is the after-tax cost of debt? Disregard the tax shield..
What is the ratio of price to expected earnings for River Cruises before it borrows the $220,000? What is the ratio after it borrows?
A stock has a beta of 1.14 and an expected return of 10.5 percent. A risk free asset currently early 2.4 percent. What is the expected return on a portfolio that is equally invested in the two assets? If a portfolio of the two assets has a beta of .9..
Given a floater/inverse floater tranche with a total principal amount of $25,000,000, 7% interest, and even allotments to the floater class and the inverse floater classes what is the maximum interest rate cap on the floater class?
Starting today, George is going to contribute $300 on the first of each month to his retirement account. His employer will contribute an additional 50% of the amount George contributes. If both George and his employer continue to do this and he can e..
What is the current value per share at a discount rate of 14 percent?
What is the composition of the Dow Jones Industrial Average?
The Square Box is considering two independent projects, both of which have an initial cost of $18,000. The cash inflows of Project A are $3,000, $7,000, and $10,000 over the next three years, respectively.
Your broker offers to sell you some shares of Bahnsen & Co common stock that paid a dividend of $2 yesterday. You expect the dividend to grow at the rate of 5% per year for the next 3 years, and if you buy the stock, you plan to hold it for 3 years a..
You are working on the valuation for an upcoming IPO. The company that wants to sell its stock expects the following future free cash flows (FCF, in millions of dollars): -7 in year 1, 7 in year 2, 15 in year 3, and cash flows are expected to grow st..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd