Question
QUESTION 1 consider a business planning to acquire a firm that has the following characteristics: -it has 1000 commion shares and no senior securities outstanding
QUESTION 1 consider a business planning to acquire a firm that has the following characteristics: -it has 1000 commion shares and no senior securities outstanding . -all its assets are useful to the acquiring firem and will be retained . -physical assets match the firms readily identifiable lifespan of 10 years with no need for prior replacement and no residual value . no prospects for synergy exists. after-tax net cash inflows anticipated from the acquisition of $10,000per year for the first five years increasting to $!2,000 per year for the remaining five years . Given the risk inherent in these cash flow estimates,the appropirate discount rate is 18 percent. what is the maximum proce per share that should be paid for this acquisition ? (HINT :use 4 decimal places for your calculations.) A)$55.28 B)$47.67 c)$67.26 d)$37.50 E)None of the above .
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