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.
what is okun''s law ? In economics study, Okun's law also named after Arthur Melvin Okun is an empirically observed relationship relating among unemployment to losses in a specific
discuss four weaknesses of using national income statistics in comparing living standards between two countries
Steps to real wage rates to fall Wage 'stickiness' or wage inflexibility may stop the real wage rate falling to the full-employment wage rate. Stickiness or inflexibility is ca
The market demand for a factor The market demand curve for any input is not simply the horizontal summation of the individual demand curves of all the firms. This is due to th
Define the Natural rate of unemployment Natural rate of unemployment is defined as the sum of rates of structural, frictional, and classical unemployment (excluding cyclical un
TRADE LIBERALISATION UNDER WTO: In the Uruguay Round negotiations, India agreed to reduce tariff on a large number of commodities and remove quantitative restrictions (QRs
1. Kuhn - Tucker Conditions Max 2x + 3y s.t. pxX + pyY ≤ M. x ≥ 0, y ≥ 0 2. Max (8 + x)(8 + y) s.t. pxX + pyY ≤ M. x ≥ 0, y ≥ 0 Utility function 3. U(x, y)
You decide to buy a home for $1,000,000. You approach two banks for financing. The first requires a 10% down payment and requires monthly payments on a 20 year mortgage sufficient
How to prepare a a project on a new product in africa.
what cause balance of payment curve to shift
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