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JB is analyzing buying a part of DS Inc. The deal would require $ 1 0 0 million initially. Looking through analysis, the expected exit
JB is analyzing buying a part of DS Inc. The deal would require $ million initially. Looking through analysis, the expected exit for the deal is at the end of year selling equity for $ million. The expected return available on investments with similar risk is
A What is the NPV of this deal? What is the IRR of this deal?Show all calculations and steps
B There is an alternative structure in which you would exit the deal at the end of the first year but sell your equity stake for $ million. What is the NPV of this alt deal? What is the IRR of this alt deal? Show all calculation and steps.
C Which structure for the deal selling end of year or year makes most sense and why?
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