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Firm Z is the result of a merger between firm X and firm Y. Firm X...
Firm Z is the result of a merger between firm X and firm Y. Firm X was paying 2.50% on its debt and had a beta of 2.2. Firm Y was paying 3.50% on its debt and had a beta of 25. Firm X had 800 M$ assets and 30%-70% equity-debt structure while Firm Y had 200 MS assets and 20%-80% equity-debt structure. 1. What is the WACC of firm Z knowing that the size of the new entity allowed...
Note : show the results in Details Please ( How did they Came ) Firm Z...
Note : show the results in Details Please ( How did they Came
)
Firm Z is the result of a merger between firm X and firm Y. Firm X was paying 2.50% on its debt and had a beta of 2.2. Firm Y was paying 3.50% on its debt and had a beta of 25. Firm X had 800 M$ assets and 30%-70% equity-debt structure while Firm Y had 200 MS assets and 20%-80% equity-debt structure. 1. What is...
1. Assume that Firm X acquires Firm Y by paying $36m of cash. To finance for...
1. Assume that Firm X acquires Firm Y by paying $36m of cash. To finance for the acquisition, X borrowed the entire amount. The balance sheet of X and Y are as follow. Construct a post merger balance sheet using the purchase method of accounting. Balance Sheet - X (in $m) Cash 25 Debt 20 Fixed Assets 95 Equity 100 120 120 Balance Sheet - Y (in $m) Cash 4 Equity 30 Fixed Assets 26 30 30
Firm Z has outstanding bonds with a 5% coupon that mature in 10 years and are...
Firm Z has outstanding bonds with a 5% coupon that mature in 10 years and are currently selling for $975. The firm’s managers believe that they can raise new debt at a similar rate. The firm’s tax-rate is 30%. Also, the firm’s beta is 1.5, the market risk premium is 6% and the risk-free rate is 3%. If the firm’s target capital structure is evenly split between debt and common equity but no preferred stock, what is the firm’s weighted...
An all-equity firm has 250,000 shares outstanding. The firm’s assets will generate an expected EBIT of...
An all-equity firm has 250,000 shares outstanding. The firm’s assets will generate an expected EBIT of $2,000,000 per year (beginning one year from today) in perpetuity. The firm will make no new capital or working capital investments and all assets are fully depreciated. The assets have a beta of 1.5, therisk-free rate is 5%, and the market risk premium is 5%. The financial analysts at the firm have estimated the optimal capital structure to be wd= 40%; we= 60% (or,...
1. 2. 3. 4. 5. 6. 7. 5. Merger analys is Adjusted present value (APV) approach...
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5. Merger analys is Adjusted present value (APV) approach Aa Aa BTR Warehousing, which is considering the acquisition of Dual Purposes Products Co. (DPP), estimates that acquiring DPP will result in an incremental value for the firm. The analysts involved in the deal have collected the following information from the projected financial statements of the target company: Data Collected (in millions of dollars) Year 1 Year 2 Year 3 EBIT $13.0 $15.6 $19.5...
a 63) Firm X has total earnings ofS49,000, a market value per share of S64, abook value share of $38, and has 25,000 shares outstanding. Firm Y has total earnings of $34,000, a market value per s...
a 63) Firm X has total earnings ofS49,000, a market value per share of S64, abook value share of $38, and has 25,000 shares outstanding. Firm Y has total earnings of $34,000, a market value per share of $21, a book value per share of $12, and has 22,000shares outstanding. Assame Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $2 per share. Also assume neither firm has any debe before...
Firm X has 1 million shares of common stock @ $10 par value. The shares are...
Firm X has 1 million shares of common stock @ $10 par value. The shares are currently trading at $50 per share. Current risk free rate is 2%, market risk premium is 7% and the company has a beta coefficient of 2.0. During last year, it issued 10,000 bonds with face value $1,000 paying 10% coupon annually maturing in 20 years. Bond Yield is 9%. The bonds are currently trading at $1100. The company's tax rate is 20%. Calculate the...
The economy is back up on its feet. This is a merger and acquisition question between...
The economy is back up on its feet. This is a merger and acquisition question between golf companies. This has caused many changes in the deal metrics. Sales, Terminal values, capital structure, and the risk metrics are all changed, …And in addition, Birdie’s(a golf company) TAX advisors believe that Hybrid’s Net Operating Losses (NOLs) can now be utilized and applied to Hybrid’s total Cash Flows; in addition to the dividends. Please answer all the questions associated with this new set...
QUESTION 4 Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a...
QUESTION 4 Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D 1 = $2.50), and the dividend is expected to grow at a constant rate of 5.50% a year. The before-tax cost of debt is 7.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from reinvested earnings? a....
Firm Z is the result of a merger between firm X and firm Y. Firm X was paying 2.50% on its debt and had a beta of 2.2. Firm Y was paying 3.50% on its debt and had a beta of 25. Firm X had 800 M$ assets and 30%-70% equity-debt structure while Firm Y had 200 MS assets and 20%-80% equity-debt structure. 1. What is the WACC of firm Z knowing that the size of the new entity allowed...
Note : show the results in Details Please ( How did they Came
)
Firm Z is the result of a merger between firm X and firm Y. Firm X was paying 2.50% on its debt and had a beta of 2.2. Firm Y was paying 3.50% on its debt and had a beta of 25. Firm X had 800 M$ assets and 30%-70% equity-debt structure while Firm Y had 200 MS assets and 20%-80% equity-debt structure. 1. What is...
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5. Merger analys is Adjusted present value (APV) approach Aa Aa BTR Warehousing, which is considering the acquisition of Dual Purposes Products Co. (DPP), estimates that acquiring DPP will result in an incremental value for the firm. The analysts involved in the deal have collected the following information from the projected financial statements of the target company: Data Collected (in millions of dollars) Year 1 Year 2 Year 3 EBIT $13.0 $15.6 $19.5...
a 63) Firm X has total earnings ofS49,000, a market value per share of S64, abook value share of $38, and has 25,000 shares outstanding. Firm Y has total earnings of $34,000, a market value per share of $21, a book value per share of $12, and has 22,000shares outstanding. Assame Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $2 per share. Also assume neither firm has any debe before...
Firm X has 1 million shares of common stock @ $10 par value. The shares are currently trading at $50 per share. Current risk free rate is 2%, market risk premium is 7% and the company has a beta coefficient of 2.0. During last year, it issued 10,000 bonds with face value $1,000 paying 10% coupon annually maturing in 20 years. Bond Yield is 9%. The bonds are currently trading at $1100. The company's tax rate is 20%. Calculate the...
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