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Cash versus Stock Payment
Eastman Corp. is analyzing the possible acquisition of Kodiak Company. Both firms have no debt. Eastman believes the acquisition will increase its total after tax annual cash flows by $2.6 million indefinitely. The current market value of Kodiak is $102 million, and that of Eastman is $140 million. The appropriate discount rate for the incremental cash flows is 12 percent. Eastman is trying to decide whether it should offer 40 percent of its stock or $110 million in cash to Kodiak's shareholders.
a. What is the cost of each alternative?
b. What is the NPV of each alternative?
c. Which alternative should Eastman choose?
Now calculate the IRR for the project. Is this an acceptable project? Why or why not? Is there a conflict between your answer to part C?
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The time from acceptance to maturity on a $1000000 bankers acceptance is 120days. the importer's bank's acceptance commission is 1.75% and the market rate for 120day B/A is 5.75%.
training assessment is an important task for hr personnel. use the argosy university online library and textbooks to
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