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The venture investors and founders of ACE Products, a closely held corporation, are contemplating merging the successful venture into a much lager diversified firm that operates in the same industry. ACE estimates its free cash flows that will be available to the enterprise next year at $5,200,000. Since the venture is now in its maturity stage, ACE's free cash flows are expected to continue to grow at a 6 percent annual compound growth rate in the future. A weighted average cost of capital (WACC) for the venture is estimated at 15 percent. Interest-bearing debt owed by ACE is $17.5 million. In addition, the venture has surplus cash of $4 million. ACE currently has five million shares outstanding, with three million held by venture investors and two million held by founders. The venture investors have an average investment of $2.50 per share while the founders' average investment is $.50 per share. A. Based on the above information, estimate the enterprise value of ACE Products. What would be the value of the venture's equity? B. How much of the value of ACE would belong to the venture investors versus the founders? How much would the venture be worth on a per-share basis? C. What would be the percentage appreciation on the stock bought by the venture investors versus the investment appreciation for the founders?
which job pays the higher salary? 4. A firm has 40,000,000 in revenues, 12,500,000 in fixed costs, 10,250,000 in variable costs, and interest of 2,000,000. Compute the DOL, DFL, and DCL. Please show all work.
Calculate the firm's current earnings per share (EPS) and price/earnings (P/E) ratio-Compare and contrast the stockholders' position under the dividend and repurchase alternatives
Assume that in 2009, an 1898 Morgan silver dollar sold for $9,250. What was the rate of return on this investment? ( Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations.
The Pebble Creek coach took the funds and invested them in a savings account that earns .4% per month. How long before the savings account be sufficient to buy the new uniforms?
Define the flow of funds model provided in the unit.
Garfield and Moore has 130,000 shares of common stock outstanding at a price per share of $41.20. There are 12,000 shares of preferred stock outstanding at a price of $58 a share.
Two machines, A and B, which carry out the same functions, have the following costs and lives. Which machine would you choose? Justify your decision.
Suppose that a government will collect its sales taxes in sufficient time to satisfy available criterion, it would ordinarily recognize revenue from sales taxes in,
Sensitivity analysis and Scenario analysis- Determine the essential difference between sensitivity analysis and scenario analysis?
A Japanese company has a bond outstanding that sells for 96 percent of its ¥100,000 par value. The bond has a coupon rate of 6.30 percent paid annually and matures in 19 years.
what is the yield on a 4-year security with no maturity, default, or liquidity risk?
Avicorp has a $11.2 million debt issue outstanding, with a 5.8% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 96% of par value.
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