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Cash versus Stock Payment Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Penn believes the acquisition will increase its total after tax annual cash flows by $2.7 million indefinitely. The current market value of Teller is $64 million, and that of Penn is $128 million. The appropriate discount rate for the incremental cash flows is 12 percent. Penn is trying to decide whether it should offer 40 percent of its stock or $87 million in cash to Teller's shareholders.
a. What is the cost of each alternative?
b. What is the NPV of each alternative?
c. Which alternative should Penn choose?
The stock of Big Joe's has a beta of 1.32 and an expected return of 11.70 percent. The risk-free rate of return is 4.2 percent. What is the expected return on the market?
Suppose a company has $350,000 in current assets. The company's current ratio is 1.25, and its quick ratio is 0.8. Compute the company's current liabilities and inventories.
Find the internal rate of return
1. What break-even resale price in four years would make you indifferent between buying and leasing? 2. What is the present value of purchasing the car?
Banks find it necessary to accommodate their clients' needs to buy or sell FX forward, in many instances for hedging purposes. How can the bank eliminate the currency exposure it has created for itself by accommodating a client's forward transaction?
your firm hired vikram mehra as an active manager for its pension fund. his benchmark is the russell 2000 growth index.
Why Are Hospitals Buying Physician Practices and Forming Insurance Companies?
An introduction to the company, including background information
several years ago the value line investment surveynbsp reported the following market betas for the stocks of selected
suppose that jb cos. has a capital structure of 66 equity 34 debt and that its before-tax cost of debt is 13 while its
Consequently, he wants to deduct $35,000 on his 2013 tax return. Write a letter to Mr. Huffman discussing the tax implications of the appraisal and subsequent sale of the art he donated. Use the principles of effective document design discussed in..
Compute a fair rate of return for Intel common stock, which has a 1.2 beta. The risk free rate is 6 percent, and the market portfolio (New York Stock Exchange stocks) has an expected return of 16 percent.
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