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.
How can consumers become better educated about the products they are considering for purchase? To what extent do you personally go to acquire the best information available?
Once we have monthly data on a price index we can evaluate the inflation. In most nations, the percentage change in price index during one month is small. Hence it is more common t
Explain the term production function in the economics. Production Function A production function is the association between the quantity of inputs a firm utilizes and the qu
The tax-adjusted Multiplier and the balanced budget Multiplier are explained below: Taxes act as drag on the multiplier effect of government expenditure, because they represent
factors that causes the shifts in balance of payments
There are three industrial firms in a quaint town of South Orange where the municipal government wants to reduce pollution to 120 units from uncontrolled level of 210 units. Three
What is income generation process
discuss mec
State the term- - GDP is a flow Lastly, note that GDP is a flow variable and not a stock variable. By a flow variable we mean a variable which is measured in something per uni
Define elasticity of supply. What factors influence Elasticity of Supply? There is only one type of identifiable elasticity of supply measuring the responsiveness of market sup
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: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd