What is the terminal value

Assignment Help Finance Basics

Reference no: EM13291735

Pizza Place, a national pizza chain, is considering purchasing a smaller chain, Western Mountain Chain. Pizza Place's analysts project that the merger will result in incremental net cash flows of $1.8 million in Year 1, $2.3 million in Year 2, and $2.95 million in Year 3, $5.2 million in Year 4, and $5.5 million in Year 5. In addition, Western's Year 5 cash flows are expected to grow at a constant rate of 4.2% after Year 5. Assume that all cash flows occur at the end of the year. The acquisition will be made immediately if it is undertaken. Western's post merger beta is estimated to be 1.4 and its post merger tax rate would be 40%. The risk free rate is 6% and the market risk premium is 4.5%. what is the terminal value?

Reference no: EM13291735

Questions Cloud

How many delay bins do the multipath components fall : In a CDMA system the chip duration is 0.26us and maximum excessdelay 1.3us, into how many delay bins do the multipath components fall if the maximum excess delay is 100ns is the CDMA system narrowband or wideband

Calculate the resultant displacement vector : 4m, 32 degrees east of north 57.3m, 36 degrees south of west 17.8m, straight south. calculate the resultant displacement vector

What is angela after-tax holding period return : Her combined state and federal tax rate on both her capital gains in excess of one year and her dividend income is 18%. What is Angela's after-tax holding period return on her investment in ABC stock?

How far away will the target need to be : Angry Bird is launched horizontally with a slingshot with a speed of 6.07 m/s. how far away will the target need to be

What is the terminal value : The risk free rate is 6% and the market risk premium is 4.5%. what is the terminal value?

Find the distance the block slides before coming to rest : An 8.71-kg block slides with an initial speed of 1.62 m/s down a ramp inclined at an angle of 27.0° with the horizontal. find the distance the block slides before coming to rest

Find the energy delivered to battery during the five hours : The terminal voltage of the battery is v=11 +0.5t for t>0. a. Find the energy delivered to the battery during the five hours. b. If electrical energy costs 10 cents/k Wh, find the cost ofcharging the battery for five hours.

Explain how to neutralize a 2m hcl solution : In order to neutralize a 2M HCL solution you could use a 2M NaOH solution. What will be the difference(if any) if you would use a 6M NaOH solution instead

Create a brief senario that explains the effects of debt : Create a brief senario that explains the effects of debt financing on a health care organization's risk and returns.

User Account

All Pages