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Can you please answer the questions on the attachment. this is the full case In April 1994, Novell Inc. announced its plan to acquire WordPerfect
Can you please answer the questions on the attachment. this is the full case
In April 1994, Novell Inc. announced its plan to acquire WordPerfect Corporation for SLC billion At the time of the acquisition, the relevent informetion on the two companies wes as follows: Revenues Cost of Goods Sold (w/o Depreciation) Depreciation Tax Rete Capital Spending Working Capital (as % of Revenue) Expected Growth Rete in Revenues/aIT Expected Period of High Growth GrovRh rete After High-Growth Period Bete After High-Growth period ,A.10ll 57.00% S4200 35.000k szoa 40.00% 25.00% 10 years 6.00% WordPerfect 3600.00 75.00% 25.00 35.00% sco_oo 30.00% 15.00% 10 years 6.00% Capitel spending will be offset by depreciation after the high-growth period. Neither firm hes any debt outstanding. The treasury bond rete is 7% A Estimate the value of Novell, operating independently. B. Estimate the value of WordPerfect. operating independently C Estimate the value of the combined firm, with no synergy. D. As a result of the merger, the combined firm is expected to grow 24% a year for the high-growth period. Estimate the value of the combined firm with the higher growth. E. What is the synergy worth? What is the maximum price thet Novell can pay for Wordperfect?
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