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Emerging Capital Market

Autor:   •  September 7, 2011  •  Study Guide  •  382 Words (2 Pages)  •  1,742 Views

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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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