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What is the maximum price per share telecom should pay

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Question - Telecom Industries is considering the purchase of Wireless Manufacturing. Wireless is currently a supplier for Telecom and the acquisition would allow Telecom to better control its material supply. The current cash flow from assets for Wireless is $7.1 million. The cash flows are expected to grow at 10 percent for the next five years before leveling off to 4 percent for the indefinite future. The costs of capital for Telecom and Wireless are 11 percent and 9 percent, respectively. Wireless currently has 2.5 million shares of stock outstanding and $22 million in debt outstanding. What is the maximum price per share Telecom should pay for Wireless?

Reference no: EM133039469

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