What is maximum price per share that arthouse should offer

Assignment Help Financial Management
Reference no: EM131530834

The owners of Arthouse Inc., a national artist supplies chain, are contemplating purchasing Craftworks Inc, a smaller chain. Arthouse's analysts project that the merger will result in incremental free flows and interest tax savings with a combined present value of $72.52 million, and they have determined that the appropriate discount rate for valuing Craftworks is 14%. Craftworks has 8 million shares outstanding and no debt. Craftworks' current price is $16.25. What is the maximum price per share that Arthouse should offer?

Reference no: EM131530834

Questions Cloud

What is the pretax required return on gordon stock : What is the pretax required return on Gordon’s stock?
What is company weighted-average cost of capital : What is the company’s weighted-average cost of capital if the corporate tax rate is 35%?
Analyze this using euac measure and marr : Analyze this using an EUAC measure and a MARR of 15% to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000.
A long-term unsecured corporate bond : A long-term unsecured corporate bond, a loan which requires no assets as collateral, a method of retiring bonds in an orderly process over the life of the bond.
What is maximum price per share that arthouse should offer : What is the maximum price per share that Arthouse should offer?
Example of a scenario analysis and a sensitivity analysis : Provide an example of a scenario analysis and a sensitivity analysis.
Why has the foreign exchange market grown so rapidly : Why has the foreign exchange market grown so rapidly over recent decades? Do you expect it to continue to grow rapidly?
Calculate convexity of bond that pays annual coupon rate : Calculate convexity of a bond that pays annual coupon rate at a rate of 7% and matures in 3 years. Assume face vale of $1000 and the bond is selling at YTM of 7
The shortfalls of the dividend discount model : What do you think are the shortfalls of the dividend discount model?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the bond price today if the coupon is paid annually

what is the bond price today if the coupon is paid anually?

  Calculate? total asset turnover and its net profit margin

Highgate Computer Company produces $1.9 million in profits from ?$20 million in sales. Calculate? Highgate's total asset turnover and its net profit margin.

  What is the expected market price per share

You are thinking about buying a share of Glencoe Industries, which has a current market price of $30.00 per share. Glencoe expects to pay a dividend of $1.125 per share next year. Your required rate of return on these types of investments s 6% and is..

  WACC for the last dollar raised to complete the expansion

Klose Outfitters Inc. believes that its optimal capital structure consists of 30% common equity and 70% debt, and its tax rate is 40%. Klose must raise additional capital to fund its upcoming expansion. The firm will have $1 million of retained earni..

  What is barrys total profit or loss

What is Barry's total profit or loss if the value of the yen in one month is 0.0070 euro? What is Barry's total profit or loss if the value of the yen in one month is $0.0090 euro?

  Operating profit margin-what is the return on equity

Keller Cosmetics maintains an operating profit margin of 8.95% and a sales-to-assets ratio of 3.80. It has assets of $690,000 and equity of $490,000. Interest payments are $49,000 and the tax rate is 30%. What is the return on Equity?

  How much will abigail have at the end of eight years

How much will Abigail have at the end of eight years when she retires?- With $4,000,000 set aside for her nephew upon her death, how much can Abigail withdraw each month during her retirement?

  Effective annual interest rate on revolving arrangement

What is your effective annual interest rate (an opportunity cost) on the revolving credit arrangement if your firm does not use it during the year?

  What is the companys average balance in accounts payable

ABC Company has a cash cycle of 11.15 days, an operating cycle of 23.99 days, and an average collection period of 5 days. The company reported cost of goods sold of $233,840. What is the company's average balance in Accounts Payable?

  Projects have positive npv

Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, re..

  Establish trust fund

You would like to establish a trust fund that will provide $120,000 a year forever for your heirs. The trust fund is going to be invested very conservatively so the expected rate of return is only 5.75 percent. How much money must you deposit today t..

  What is karls recognized gain

LO.8, 10 Karl purchased his residence on January 2, 2014, for $260,000, after having lived in it during 2013 as a tenant under a lease with an option to buy clause. On August 1, 2015, Karl sells the residence for $315,000. On June 13, 2015, Karl purc..

Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd