Using the APV method, estimate the value of Ideko and the NPV of the deal using the

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Using the APV method, estimate the value of Ideko and the NPV of the deal using the continuation value you calculated in Problem 13 and the unlevered cost of capital estimate in Section 19.4. Assume that the debt cost of capital is 6.8%; Ideko’s market share will increase by 0.5%

per year; investment, financing, and depreciation will be adjusted accordingly; and the projected improvements in working capital do not occur (i.e., the assumptions in Problem 6).

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Corporate Finance The Core

ISBN: 9781292431611

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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