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Juicers Inc. is thinking of acquiring Fast Fruit Company. Juicers expects Fast Fruit's NOPAT to be $ 9 million the first year, with no net
Juicers Inc. is thinking of acquiring Fast Fruit Company. Juicers expects Fast Fruit's NOPAT to be $ million the first year, with no net new investment in operating capital and no interest expense. For the second year, Fast Fruit is expected to have NOPAT of $ million and interest expense of $ million. Also, in the second year only, Fast Fruit will need $ million of net new investment in operating capital. Fast Fruit's marginal tax rate is After the second year, the free cash flows and the tax shields from Fast Fruit to Juicers will both grow at a constant rate of Juicers has determined that Fast Fruit's cost of equity is and Fast Fruit currently has no debt outstanding. Assume that all cash flows occur at the end of the year. Wat is the max fair value?
Juicers Inc. is thinking of acquiring Fast Fruit Company. Juicers expects Fast Fruit's NOPAT to be $ million the first year, with no net new investment in operating capital and no interest expense. For the second year, Fast Fruit is expected to have NOPAT of $ million and interest expense of $ million. Also, in the second year only, Fast Fruit will need $ million of net new investment in operating capital. Fast Fruit's marginal tax rate is After the second year, the free cash flows and the tax shields from Fast Fruit to Juicers will both grow at a constant rate of Juicers has determined that Fast Fruit's cost of equity is and Fast Fruit currently has no debt outstanding. Assume that all cash flows occur at the end of the year. Wat is the max fair value?
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