What should be minimum asking price from potential acquirer

Assignment Help Financial Management

Reference no: EM131329158

Dean and Edwards, Inc. (D&E) is a firm that provides temporary employees to businesses. D&E's client base has grown rapidly in recent years, and the firm has been quite profitable.

The firm's cofounders, Mr. Dean and Mr. Edwards, believe in a conservative approach to financial management and therefore have not borrowed any money to finance their business. A larger company in the industry has approached D&E about buying them out. In the most recent year, 2009, D&E generated free cash flow of $1.4 million.

Suppose that D&E projects that these cash flows will grow at 15 percent per year for the next four years, and then will settle down to a long-run growth rate of 7 percent per year. The cofounders want a 14 percent return on their investment. What should be their minimum asking price from the potential acquirer?

Reference no: EM131329158

Questions Cloud

Capturing the information in the original article : How close do you feel your summary came to capturing the information in the original article - Does this summary use effective transitions as it progresses from paragraph to paragraph?

Estimate the value of roban corporations entire company : Estimate the value of Roban Corporation's entire company by using the free cash flow approach.- Use your finding in part (a), along with the data provided above, to find Roban Corporation's common stock value.

Clarify what oscar has to do to attack this system : For your answer, assume a message x that is sent in clear together with its MAC over the channel: (x,MACk(x)). Exactly clarify what Oscar has to do to attack this system.

How the given information would affect the assessment : Discuss how the above information would affect the assessment and work your office does on the audit of CitCo. Include in your discussion any special considerations that may result if the audit is conducted under GAGAS.

What should be minimum asking price from potential acquirer : The cofounders want a 14 percent return on their investment. What should be their minimum asking price from the potential acquirer?

Create a simple household budget : Create a simple household budget, including all income and expenses. There are various templates available online to help you do this. Find one that you feel comfortable with and that fits your needs to complete this activity.

What can sls do to prepare for the next incident : Other than installing virus and worm control software, what can SLS do to prepare for the next incident?

How would the price or earnings ratio change : How would the price/earnings ratio change if investors believed that DBS's long-term growth rate was 6 percent rather than 4 percent?

Calculate the total service department cost allocated : Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). Calculate the total service department cost allocated to production department P1

User Account

All Pages