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1. Two potential acquisition candidates, AJAX and COMET, exhibit price to cash flow ratios of 6 and 4, respectively. AJAXs cash flows per share are
1. Two potential acquisition candidates, AJAX and COMET, exhibit price to cash flow ratios of 6 and 4, respectively. AJAXs cash flows per share are expected to grow at a 12% annual rate and COMETs at a more modest 10% rate. AJAXs current cash flow per share is $4, and COMETs is $5 million. AJAXs current share price is $28 and Comets is $16. Which of the two firms is more attractive based on a ranking of their PEG ratios as an acquisition target? 10 points
1. Two potential acquisition candidates, AJAX and COMET, exhibit price to cash flow ratios of 6 and 4, respectively. AJAXs cash flows per share are expected to grow at a 12% annual rate and COMETs at a more modest 10% rate. AJAXs current cash flow per share is $4, and COMETs is $5 million. AJAXs current share price is $28 and Comets is $16. Which of the two firms is more attractive based on a ranking of their PEG ratios as an acquisition target? 10 points
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