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Galina-37 [17]
3 years ago
14

Juicers Inc. is thinking of acquiring Fast Fruit Company. Juicers expects Fast Fruit's NOPAT to be $9 million the first year, wi

th no net new investment in operating capital and no interest expense. For the second year, Fast Fruit is expected to have NOPAT of $25 million and interest expense of $5 million. Also, in the second year only, Fast Fruit will need $10 million of net new investment in operating capital. Fast Fruit's marginal tax rate is 40%. After the second year, the free cash flows and the tax shields from Fast Fruit to Juicers will both grow at a constant rate of 4%. Juicers has determined that Fast Fruit's cost of equity is 18.00%, and Fast Fruit currently has no debt outstanding. Assume that all cash flows occur at the end of the year, Juicers must pay $35 million to acquire Fast Fruit. What it the NPV of the proposed acquisition? Note that you must first calculate the value to Juicers of Fast Fruit's equity. a. $75.5 million b. $45.0 million c. $68.2 million d. $83.2 million
Mathematics
1 answer:
Ivenika [448]3 years ago
3 0
Oh yeah sweetie I don’t have
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For this to happen, 5 or 6 people have to show up since the limousine can accommodate a maximum of 4 people

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Binomial distribution function is represented by

P(X = x) = ⁿCₓ pˣ qⁿ⁻ˣ

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x = Number of successes required = 5 or 6

p = probability of success = 0.5

q = probability of failure = 0.5

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P(X = 6) = ⁶C₆ (0.5)⁶ (0.5)⁶⁻⁶ = 1(0.5)⁶ = 0.015625

P(X=5) + P(X=6) = 0.09375 + 0.015625 = 0.109375

b) If six reservations are made, what is the expected number of available places when the limousine departs?

Probability of one person not showing up after reservation of a seat = 0.5

Expected number of people that do not show up = E(X) = Σ xᵢpᵢ

where xᵢ = each independent person,

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E(X) = 6(1×0.5) = 3

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So, expected number of unoccupied seats = 1

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3 years ago
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