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!
FMC Corporation, an American chemical manufacturing company headquartered in Philadelphia, Pennsylvania is considering acquisition of Cheminova, a European crop protection player. FMC is a public company and Cheminova is a private company. Cheminova is financed with 50% debt (that is, 50% of firm value is in debt and 50% in equity). Yield to maturity on its outstanding debt is 4%. Annual before-tax before-interest operating cash flows for the year just ended were $6 million. The corporate tax rate was 40 percent for both FMC and Cheminova. Assume perpetual operating cashflows for Cheminova's future cashflows. FMC has return on equity of 11.05%, debt-to-equity ratio of 25%, and yield to maturity of 3% on its outstanding debt. Assume also that the probability of bankruptcy is minimal so that costs associated with potential bankruptcy can be ignored.
a) What is the maximum acquisition price that FMC can pay for acquiring Cheminova's all assets assuming that both FMC and Cheminova are subject to similar business risks?
b) Compute weighted average cost of capital for Cheminova.
c) FMC has access to cheaper debt (at 3%) than Cheminova (at 4%) and FMC plans to fund half the acquisition with debt. How much should FMC be willing to pay for Cheminova? Justify your answer.
A 10-year bond pays annual interest of 8% on a face value of $1,000. If similar bonds are currently yielding 10%, what is the market value of the bond?
What is the price of a European call option on a non-dividend-paying stock when the price is $52, the strike is $50, the risk-free interest rate is 12%.
Q1. ____ involves allocating ownership of the risk to another party. Q2. A project manager can chart the probability and impact of risks on a ____.
On October 9th 2021, 130 countries all over the world agreed to impose a global minimum corporate tax rate of 15 percent, aiming to deter MNCs from exploiting l
Fill in the number of periods for the following table. a. Using the waiting period formula, n = ln(FV/PV) / ln(1+r). b. Using the time value of money keys or function from a calculator or spreadsheet.
Frederic Taylor applied the scientific method to management. In many cases, this meant measuring a process to determine its optimal possible output.
1. Why is it advantageous to conduct your business with a bank that provides online banking services? 2. Why is it best to select a bank with convenient ATMs?
What is the company's market value debt-equity ratio? , I need detail explanation for this question.
XYZ is an unlevered firm and is currently valued at $820,000. It has 15,000 shares outstanding. As part of a Management Buyout (MBO), XYX is planning to borrow
A stock selling at $150 is expected to pay a dividend of $10 in three months and has a volatility of 20%. Consider call and put options with a 6-month maturity
The following excerpts are taken from the annual report of J. Crew Group, Inc. At January 29, 2005 and January 28, 2006, 92,800 shares of Series A preferred.
Keene, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $150,000. The fixed asset will be depreciated
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