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!
Happy Times, Inc., wants to expand its party stores into the Southeast. In order to establish an immediate presence in the area, the company is considering the purchase of the privately held Joe’s Party Supply. Happy Times currently has debt outstanding with a market value of $220 million and a YTM of 9 percent. The company’s market capitalization is $300 million, and the required return on equity is 14 percent. Joe’s currently has debt outstanding with a market value of $27.5 million. The EBIT for Joe’s next year is projected to be $16 million. EBIT is expected to grow at 10 percent per year for the next five years before slowing to 3 percent in perpetuity. Net working capital, capital spending, and depreciation as a percentage of EBIT are expected to be 9 percent, 15 percent, and 8 percent, respectively. Joe’s has 2 million shares outstanding, and the tax rate for both companies is 38 percent.
a. What is the maximum share price that Happy Times should be willing to pay for Joe’s?
Maximum share price $
After examining your analysis, the CFO of Happy Times is uncomfortable using the perpetual growth rate in cash flows. Instead, she feels that the terminal value should be estimated using the EV/EBITDA multiple. The appropriate EV/EBITDA multiple is 8.
b. What is your new estimate of the maximum share price for the purchase?
If the forward rate is $0.6735/TL, how could the bank arbitrage using a sum of $6 million? What is the spread earned?
In 2010, Senator Blanche Lincoln (D-Arkansas) proposed that commercial banks be forbidden to trade derivative securities.- Discuss the arguments for and against this proposal.
One of the more attractive features of an operating lease is that it provides the lessee with tax shields.
ABC's capital structure is limited to common equity and bonds. what is ABC's weighted average cost of capital?
What will be its optimal cash return point?
What is the company’s main line of business? What is the total market value of the firm (Market Cap)? What were its profits (EPS) in the most recent fiscal year
A fast-growing firm recently paid a dividend of $0.20 per share. The dividend is expected to increase at a 20 percent rate for the next three years. Afterwards, a more stable 11 percent growth rate can be assumed. If a 12 percent discount rate is app..
Jose, age 25, currently saves $7000 per year in his retirement account which is expected to earn 5% return. Jose is planning to retire at 62 and needs to fund his retirement upto age, 85. He has estimated that the annual amount needed during retireme..
Electronic Products has 35,000 bonds outstanding that are currently quoted at 102.3. The bonds mature in 11 years and carry a 9 percent annual coupon. What is the firm's aftertax cost of debt if the applicable tax rate is 30 percent?
Imagine you have been tasked with evaluating a portfolio manager. How would you evaluate their performance? Share specific categories you would assess, what you would expect to see and any areas in which you allow leeway
What are the developing US Financial Accounting Standards Organizations with each organization responsibilities?
Preferred stock has a dividend of $12 a year. The required return is 6%. what should the price per share be?
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