Emerging Capital Market
Autor: andrew • September 7, 2011 • Study Guide • 382 Words (2 Pages) • 1,742 Views
Problem 14.1
NPV of original 1.074254734
NPV of option 0.950667906
14.3
It makes sense to wait one year and attempt to lock in the 50m cash flows.
14.4
Tax = -2.113481306
No tax = 1.973037387
EV = -0.070221959
Yes, accept the project
M&A incentives: Synergies, tax, purchase of assets < replacement costs, diversification, gaining control of larger enterprise, breakup value
Congeric merger: related industries but no customer-supplier relationship
Conglomerate: totally different industries
LBO – transaction where firms's publicly owned stock is acquired in a mostly debt-financed tender offer and a privately own highly leveraged firm results. The firm's own management often initiates the LBO.
Divesture: selling operating unit, spinning off to separate company, carving out by selling minority interest and outright liquidation
clarifies operations, settles antitrust suits, enables management focus, raise capital
Discussion and Problem Solving: Q14.1, P14.3-5, Q26.1-5, P26.5-6
kProblem 14.1
NPV of original 1.074254734
NPV of option 0.950667906
14.3
It makes sense to wait one year and attempt to lock in the 50m cash flows.
14.4
Tax = -2.113481306
No tax = 1.973037387
EV = -0.070221959
Yes, accept the project
M&A incentives: Synergies, tax, purchase of assets < replacement costs, diversification, gaining control of larger enterprise, breakup value
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