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In the chapter introduction, we discussed the Starbucks (SBUX) acquisition of Seattles Best Coffee Company in 2003. Discuss the relevance of Seattles Bests WACC as
In the chapter introduction, we discussed the Starbucks (SBUX) acquisition of Seattles Best Coffee Company in 2003. Discuss the relevance of Seattles Bests WACC as the opportunity cost of funds that should be used in valuing the acquisition. What if Starbucks planned to finance the entire $72 million acquisition using cash and Starbucks common stock, thereby using no debt? Does this fact alter your thinking about the appropriate discount rate for valuing Seattles Best? If so, how?
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