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DedPeter [7]
3 years ago
10

The valuation of the cat food business is based on cash flows of $180,500 per year over a five year period. The target business

has the same risk as the firm’s overall operations. The cost of equity is 15 percent and the cost of debt is 3 percent on an after-tax basis. The firm’s capital structure consists of 10 million in equity and 8 million in debt.
What is the most the pet-food manufacturer should pay for acquiring the cat food business per its required return (WACC)?
Business
1 answer:
mezya [45]3 years ago
4 0

Answer: $690,044

Explanation:

First calculate WACC.

Total capital = 10 + 8 = $18 million

WACC = (Weight of debt * after-tax cost of debt) + (weight of equity * cost of equity)

= (8/18 * 3%) + (10/18 * 15%)

= 9.67%

Using the WACC, find the present value of the cashflows for the next 5 years. This will be an annuity.

= 180,500 * (1 - (1 + r) ^-n)/r

= 180,500 * ( 1 - ( 1 + 9.67%) ^ -5)/9.67%

= $690,044.67

= $690,044

They should pay no more than this present value.

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The home must sell for $616,500 to be able to settle all costs

Explanation:

The net to the formula can be used to ascertain the price of the property , the formula is given below:

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The net to the seller in this case is the amount that seller would receive and be able to settle mortgage and closing costs and still be left with $75000

Net amount =$75000+$450000+$36000

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$561000=sales price*91%

sales price =$561000/91%

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3 years ago
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Explanation:

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vredina [299]

Answer:

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Primarily, supervisors are known to motivate employees, direct the activities of others, select the most effective communication channel, and resolve conflicts among team members.  However, the changing trend now views the supervisor as an educator, sponsor, coach, counselor, and director.  Therefore, the supervisor is expected to deplore all his skill-sets, including effective communication in combination with daily conflict resolution, transformational leadership, critical thinking, interpersonal relationship, time and priority management, and problem-solving skills.

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The formula is
A=p (1+r)^t
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P present value. ?
R interest rate 0.06
T time 11 years
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Hope it helps!
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