What is the equity value of the target to the acquirer

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Reference no: EM132041804

Assume the following post-acquisition yearly free cash flows and interest expense (in millions of dollars). Assume that the tax rate is 40% and the horizon growth rate is 6%.

2017 2018 2019 2020 2021

FCF 11.70 10.50 16.50 20.70 21.94

Interest Expense 5.00 6.50 6.50 7.00 8.16

Target’s data are: rRF = 7%; RPM = 4%, beta = 1.3, wd =30%, rd = 9%. Assume that the target has $50 million in debt.

What is the equity value of the target to the acquirer?

$216.12

$316.20

$366.18

$416.46

Reference no: EM132041804

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