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please with details thank you Buyer wants to acquire company Co. The following projections in millions are used to value Co: Year 1 Year 3

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Buyer wants to acquire company Co. The following projections in millions are used to value Co: Year 1 Year 3 200 220 Year 2 210 105 105 Year 4 230 115 Revenues Costs EBIT Change in NWC 110 110 Year 5 240 120 120 100 115 Also: Co is financed 80% with equity (E) and 20% with debt (D). The interest rate on the debt is 8%. The tax rate is 40% Appropriate beta of Co is assumed to be 0.8 Capital expenditure: 10 million each year from year 1 to year 5 Depreciation: 6 million each year from year 1 to year 5 Treasury yields for 10-year bonds are 7% The market risk premium is 7.5% After year 5, EBIT is expected to grow 3% per year in perpetuity How much Buyer should pay for 100% of the shares of Co? Buyer wants to acquire company Co. The following projections in millions are used to value Co: Year 1 Year 3 200 220 Year 2 210 105 105 Year 4 230 115 Revenues Costs EBIT Change in NWC 110 110 Year 5 240 120 120 100 115 Also: Co is financed 80% with equity (E) and 20% with debt (D). The interest rate on the debt is 8%. The tax rate is 40% Appropriate beta of Co is assumed to be 0.8 Capital expenditure: 10 million each year from year 1 to year 5 Depreciation: 6 million each year from year 1 to year 5 Treasury yields for 10-year bonds are 7% The market risk premium is 7.5% After year 5, EBIT is expected to grow 3% per year in perpetuity How much Buyer should pay for 100% of the shares of Co

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