Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Butthole Industries is buying out Avengers, Inc. Butthole and Avengers both have market capitalizations equal to their fair value or the present value of their net cash flows. Butthole generates $45M per year in net cash flows but has no growth. Avengers is expected to generate $25M in net cash flows next year. Also, grow at 15% per year after. The return on capital of both companies over the past years:
Return on Capital
Butthole
Avengers
Year 1
-20.5%
45.8%
Year 2
41.1%
-5.8%
Year 3
10.5%
20.9%
Note that the relevant discount rate for each firm is the "average" return on capital.
A. If past history is a good indicator of future performance, what are the expected return on capital and standard deviation of return on capital for the merged entity?
B. In which of the two major dimensions this merger could possibly help Butthole: boosting the return or reducing the risk? Prove your point quantitatively.
Factors Responsible for changes in Aggregate Demand The Aggregate Demand curve shows an inverse relationship between the quantity of goods and services demanded and the price l
1) The modern global economic system In finance we learn that while the future is always uncertain there are ways we gain insight and make the best possible investment decisi
Use a diagram of the open economy model (e.g. fig 32.4 from the text) to illustrate and explain the effect of the following event on the market for loanable funds, the level of net
Q. Determine price level from the quantity theory of money? The price level The price level is determined from the quantity theory of money: P = (M.V)/Y
what are the types of exchange rate
Business Cycles Economic growth is not a continuous process. Superimposed on the long-term trends are short-term fluctuations in the levels of economic activity and\or in grow
Explaining balance of payments: First, with the second oil shock of 1979-80 and doubling of India's import bill along with dismal export performance as result of severe
A government can finance its budget deficit by doing all of the following except: A. borrowing from its central bank. B. printing money. C. selling bonds. D. buying bonds.
The aim of this paper is to observe and interpret the correlations between oil price changes, and changes to key macroeconomic indicators. From this we will be able to observe if t
given the market demand curve is P=a-bQ and MC=D. derive mathematicaly a perfect compettition, B monopoloy, C, Cournot Duopoly, D cournot Tipopoly, E cournot quadropoly, F Stackleb
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd