need help with my mini case

PAMPA RV, INC. Evaluation of an Investment Opportunity Pampa RV, Inc., a publicly traded firm, is considering the acquisition of Chico Clothing Company (CCC) for a price of $12 per share. CCC is a private company that specialzzes in manufacturing clothing, shoes and accessories for beauty pageant contestants. The RV business is slow, and Pampa's CFO believes that the acquisition of CCC will help to improve overall profitability and provide much needed cash flow. Pampa's has 500.000 shares of common stock outstanding, currently trading at $9.75 per share. The book value of the common stock is $5 per share. Pampa also has bonds with a market value of $3,500,000 and a yield to maturity of 3.4%. Based on current market valuations, Pampa is currently achieving its target debt to equity ratio. Pampa's equity beta is 0.80. CCC is a private firm that was founded ten years ago by four sisters, who have a combined 100 years of experience in the beauty pageant business as competitors, judges, and coaches. CCC's cost of goods sold (COGS) is expected to be 38% of sales revenues, and selling. general and administrative (SG\&A) expenses are expected to be 12% of revenues. These estimates are in line with the firm's historical performance, which is expected to continue for the foreseeable future. The firm is 100% equity financed and has 100,000 shares of common stock outstanding. Its equity beta is estimated to be 1.353. CCC has experienced rapid growth over the last ten years. However, your analysis of industry structure suggests that competition in the beauty pageant clothing and accessories market is likely to increase in the next few years. Thus, you forecast that the perpetual growth rate for free cash flows after five years will be a modest 1.5% per year. Your team has been hired as consultants to Pampa RV to evaluate the proposed acquisition of CCC. Tables 1 and 2 below contain additional data that you have collected during your research. The corporate tax rate is 40% for all firms. Table 2 Market Data Current yield to maturity on 30 year treasury bonds 2.50% Estimate of expected average return on the S\&P 500 over the next 30 years 7.50% Here you have a list of suggested steps: 1- Put together the income Statement for the next 5 years. 2. Calculate the Operating Cash Flow for the next 5 years. 3- Calculate the Cash Flow from Assets or Free Cash Flow for the next 5 years. 4- Calculate the cost of equity for CCC. 5- Calculate CCC's WACC, in this case is going to be equal to the cost of equity since CCC does not have any debt. 6- Calculate CCC's Terminal Value in Year 5. 7. Find the tentative value of cC discounting all the Free Cash Flow for the next 5 years and the Terminal Value in year 5. 8. Calculate CCC's price per share. 9. Calculate Pampa's post-merger price per share." 10- Calculate Pampa's post-merger beta.* -The key concept is that, barring other market frictions, firm value will increase by the NPV of the project. If a firm pays $100 cash for something that is worth $120, they exchange $100 in assets (cash) for $120 in assets (value of new project), so market value increases by $20. Of course, this assumes no information problems, i.e., investors and managers see the same valuation and probability =1 that the deal will be completed. If the equity of the newly acquired firm is worth $120 and the old firm is worth say $250, then the equity value of the combined firm will be $120+$250, and it is straightforward to compute the equity veights for estimating the beta of the combined firm. PAMPA RV, INC. Evaluation of an Investment Opportunity Pampa RV, Inc., a publicly traded firm, is considering the acquisition of Chico Clothing Company (CCC) for a price of $12 per share. CCC is a private company that specializes in manufacturing clothing, shoes and accessories for beauty pageant contestants. The RV business is slow, and Pampa's CFO believes that the acquisition of CCC will help to improve overall profitability and provide much needed cash flow. Pampa's has 500,000 sharos of common stock outstanding, currently trading at $9.75 per share. The book value of the common stock is $5 per share. Pampa also has bonds with a market value of $3,500,000 and a yield to maturity of 3.4%. Based on current market valuations, Pampa is currently achieving its target debt to equity ratio. Pampa's equity beta is 0.80. CCC is a private firm that was founded ten years ago by four sisters, who have a combined 100 years of experience in the beauty pageant business as competitors, judges, and coaches. CCC's cost of goods sold (COGS) is expected to be 38% of sales revenues, and selling. general and administrative (SG\&A) expenses are expected to be 12% of revenues. These estimates are in line with the firm's historical performance, which is expected to continue for the foreseeable future. The firm is 100% equity financed and has 100,000 shares of common stock outstanding. Its equity beta is estimated to be 1.353. CCC has experienced rapid growth over the last ten years. However, your analysis of industry structure suggests that competition in the beauty pageant clothing and accessories market is likely to increase in the next few years. Thus, you forecast that the perpetual growth rate for free cash flows after five years will be a modest 1.5% per year. Your team has been hired as consultants to Pampa RV to evaluate the proposed acquisition of CCC. Tables 1 and 2 below contain additional data that you have collected during your research. The corporate tax rate is 40% for all firms. Table 2 Market Data Current yield to maturity on 30 year treasury bonds 2.50% Estimate of expected average return on the S\&P 500 over the next 30 years 7.50% PAMPA RV, INC. Evaluation of an Investment Opportunity Pampa RV, Inc., a publicly traded firm, is considering the acquisition of Chico Clothing Company (CCC) for a price of $12 per share. CCC is a private company that specialzzes in manufacturing clothing, shoes and accessories for beauty pageant contestants. The RV business is slow, and Pampa's CFO believes that the acquisition of CCC will help to improve overall profitability and provide much needed cash flow. Pampa's has 500.000 shares of common stock outstanding, currently trading at $9.75 per share. The book value of the common stock is $5 per share. Pampa also has bonds with a market value of $3,500,000 and a yield to maturity of 3.4%. Based on current market valuations, Pampa is currently achieving its target debt to equity ratio. Pampa's equity beta is 0.80. CCC is a private firm that was founded ten years ago by four sisters, who have a combined 100 years of experience in the beauty pageant business as competitors, judges, and coaches. CCC's cost of goods sold (COGS) is expected to be 38% of sales revenues, and selling. general and administrative (SG\&A) expenses are expected to be 12% of revenues. These estimates are in line with the firm's historical performance, which is expected to continue for the foreseeable future. The firm is 100% equity financed and has 100,000 shares of common stock outstanding. Its equity beta is estimated to be 1.353. CCC has experienced rapid growth over the last ten years. However, your analysis of industry structure suggests that competition in the beauty pageant clothing and accessories market is likely to increase in the next few years. Thus, you forecast that the perpetual growth rate for free cash flows after five years will be a modest 1.5% per year. Your team has been hired as consultants to Pampa RV to evaluate the proposed acquisition of CCC. Tables 1 and 2 below contain additional data that you have collected during your research. The corporate tax rate is 40% for all firms. Table 2 Market Data Current yield to maturity on 30 year treasury bonds 2.50% Estimate of expected average return on the S\&P 500 over the next 30 years 7.50% Here you have a list of suggested steps: 1- Put together the income Statement for the next 5 years. 2. Calculate the Operating Cash Flow for the next 5 years. 3- Calculate the Cash Flow from Assets or Free Cash Flow for the next 5 years. 4- Calculate the cost of equity for CCC. 5- Calculate CCC's WACC, in this case is going to be equal to the cost of equity since CCC does not have any debt. 6- Calculate CCC's Terminal Value in Year 5. 7. Find the tentative value of cC discounting all the Free Cash Flow for the next 5 years and the Terminal Value in year 5. 8. Calculate CCC's price per share. 9. Calculate Pampa's post-merger price per share." 10- Calculate Pampa's post-merger beta.* -The key concept is that, barring other market frictions, firm value will increase by the NPV of the project. If a firm pays $100 cash for something that is worth $120, they exchange $100 in assets (cash) for $120 in assets (value of new project), so market value increases by $20. Of course, this assumes no information problems, i.e., investors and managers see the same valuation and probability =1 that the deal will be completed. If the equity of the newly acquired firm is worth $120 and the old firm is worth say $250, then the equity value of the combined firm will be $120+$250, and it is straightforward to compute the equity veights for estimating the beta of the combined firm. PAMPA RV, INC. Evaluation of an Investment Opportunity Pampa RV, Inc., a publicly traded firm, is considering the acquisition of Chico Clothing Company (CCC) for a price of $12 per share. CCC is a private company that specializes in manufacturing clothing, shoes and accessories for beauty pageant contestants. The RV business is slow, and Pampa's CFO believes that the acquisition of CCC will help to improve overall profitability and provide much needed cash flow. Pampa's has 500,000 sharos of common stock outstanding, currently trading at $9.75 per share. The book value of the common stock is $5 per share. Pampa also has bonds with a market value of $3,500,000 and a yield to maturity of 3.4%. Based on current market valuations, Pampa is currently achieving its target debt to equity ratio. Pampa's equity beta is 0.80. CCC is a private firm that was founded ten years ago by four sisters, who have a combined 100 years of experience in the beauty pageant business as competitors, judges, and coaches. CCC's cost of goods sold (COGS) is expected to be 38% of sales revenues, and selling. general and administrative (SG\&A) expenses are expected to be 12% of revenues. These estimates are in line with the firm's historical performance, which is expected to continue for the foreseeable future. The firm is 100% equity financed and has 100,000 shares of common stock outstanding. Its equity beta is estimated to be 1.353. CCC has experienced rapid growth over the last ten years. However, your analysis of industry structure suggests that competition in the beauty pageant clothing and accessories market is likely to increase in the next few years. Thus, you forecast that the perpetual growth rate for free cash flows after five years will be a modest 1.5% per year. Your team has been hired as consultants to Pampa RV to evaluate the proposed acquisition of CCC. Tables 1 and 2 below contain additional data that you have collected during your research. The corporate tax rate is 40% for all firms. Table 2 Market Data Current yield to maturity on 30 year treasury bonds 2.50% Estimate of expected average return on the S\&P 500 over the next 30 years 7.50%