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Mr. Z, CEO of Shoes Inc., has identified Laces Ltd. as a possible acquisition candidate and a good strategic fit for the organization. Laces Ltd. has $100 million in assets and $20 million in par-value debt on the books. It currently trades for $35 per share on the open market and has 3 million common shares outstanding.
The current fiscal year closed yesterday with Laces Ltd. earning $10.50 M before interest and taxes (EBIT). After allowing for changes in NWC, taxes, depreciation, and capital expenditures, Laces Ltd. had $7.59 M in debt-free cash flows (cash flow from assets). Analysts expect their CFA to grow at 20% for the next two fiscal years and then settle down to a 5% annual growth rate thereafter. Laces Ltd.'s investors demand a return of 15% for similar risk assets.
Using the WACC-DCF approach, how much should Shoes Inc. should be willing to pay per share to acquire Laces Ltd?
The second issue consisted of 20-year binds with 6% coupon paid annually and attached warrants. Both issues sold at their $1000 par values. What is the implied value of the warrants attached to each bond?
Explain why the cost of debt is typically different than the cost of equity. Give examples and explain your answers.
Provide suitable example of three companies with workings out of how third company has greater required rate of return even if standard deviation of returns of third company share is lower.
What are some of the common barriers to entry for a firm entering a new country for business? How does this vary from country to country?
Assume you've two bank accounts, one called Account A and another Account B. Account A will be worth $4,700.00 in one year. Account B will be worth $7,900.00 in two years. Both accounts earn 3.8% interest. What is the present value of each of thes..
Just Dew It Corporation reports the following balance sheet data for 2004 and 2005. Based on the given balance sheets, calculate the following financial ratios for every year. Negative amount should be indicated by a minus sign.
Avicorp has a $10.3 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years.
The risk free rate of interest is 6%. The overall stock market has an expected return of 12%. ABC Stock has a beta of 1.2%. What is the required return of ABC Stock.
If the british central bank prints money to reduce unemployment, what will happen to the value of the pound in the short run and the long run?
Objective type questions on selecting lease option and What is the net advantage to leasing NAL
You have the following data on Target and Wal-Mart: Using Target as a comparable, The current value of Wal-Mart is about $54 per share. Estimate compare to the current price.
You hope to buy your dream car four years from now. Today, that car costs $82,500. You expect the price to increase by an average of 4.8 percent per year over the next four years. How much will your dream car cost by the time you are ready to buy ..
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