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Lelu [443]
3 years ago
8

You are interested in investing in a private company. Based on earnings multiples of similar publicly traded firms, you estimate

the value of the private company's stock to be $13.44 per share. You plan to acquire a majority of the shares in the company. The expected control premium is 12 percent, while the marketability discount for such a firm is 15 percent. The discount for the key person, one of the founders who may leave the firm upon your control of the firm, is 15 percent. What price should you be willing to pay for these shares
Business
1 answer:
siniylev [52]3 years ago
4 0

Answer:

$10.88

Explanation:

The value of private shares can be approximately gotten from various methods such as comparing valuation ratios, discounted flow analysis, net tangible assets, and so on.

Given that:

value of private company stock = $13.44 per share

Expected control premium = 12% = 0.12

Marketability discount = 15% = 0.15

Discount for key person = 15% = 0.15

Value per share = value of private company stock [(1 + expected control premium)(1 - Marketability discount) × (1 - discount for key person)]

= $13.44 [(1 + 0.12) × (1 - 0.15) × (1 - 0.15)]

= $10.88

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<u>Answer:</u>

D) Quantity supplied; Decrease

<u>Explanation:</u>

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Moringa products corporation had common stock of $820,000 and retained earnings of $1,250,000 on january 1. during the year, $75
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Based on the beginning retained earnings balance and the net income as well as dividends, the retained earnings balance will be $1,585,500.

<h3>How much are retained earnings on Dec. 31?</h3>

This can be found as:

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5 0
2 years ago
On April 2, Kelvin sold $40,000 of inventory items on credit with the terms 1/10, net 30. Payment on $24,000 sales was received
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Answer:

Explanation:

The journal entry is shown below:

1. Accounts receivable A/c Dr $160

        To Sales discounts forfeited $160

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The computation of the sales discount is shown below:

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Decision : It would be better to Replace Old Machine

Explanation:

Check the file attached for proper arrangement and explanation of the solution. Thank you.

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