Question is too long. Please answer question 41 worksheet and subsequent questions. Please answer question 41 worksheet and subsequent questions.

Question 41 worksheet

Cash Flows in S$	S$30
Exchange rate of S$	$0.70
Cash Flows in $	$21
PV at 9%
Cumulative PV

AutoSave O 5 . E Unit 7 through 9/szigr ment for Students Word Search Sign in x File Home Insert Draw Design Layout References Mailings Review View Help Share Comments X Cut 3 Format Painter Cleanaa Foste Aabbcodd AaBbc.dd AaBbcc Aabbcc AaB AalbCED. AaBbcood "Normal 1 No Spec... Heading 1 Heading 2 Tite Find - Replace Select Subtitle Subtle Em Calibr (Body! 11 A A A A E ES 2.1 BI UX, X A Paragraph liiiii Dictate Editor Sant Styles Editing Ecito L 1. 2 3 4 7 Questions 41 through 47 are worth 6 points each (42 points) Chapter 15 Use the following information to answer the next three questions John Deer, Inc., a U.S.-based MNC, has screened several targets. Based on economic and political considerations, only one cligible target remains in Singapore. John Deer would like you to value this target and has provides you with the following information: John Deer expects to keep the target for three years, at which time it expects to sell the firm for 200 million Singapore dollars (5$) after deducting the amount for any taxes paid. John Deer expects a strong Singapore. Consequently, the estimates for revenues for the next year are S$100 million. Revenues are expected to increase by 10% over the following two years. Cost of goods sold are expected to be 50% of revenues, Selling and administrative expenses are expected to be $10 million in each of the next three years. . The Singapore tax rate on the target's earnings is expected to be 20%. Depreciation expenses are expected to be S$5 million per year for cach of the next three years. The target will need S$3 million in cash each year to support existing operations. . The tareet's current stock orice is S$25 per share. The target has 5 million shares outstanding Any cash flows remaining after taxes are remitted by the target to John Deer, Inc. John Deer uses the prevailing exchange rate of the Singapore dollar as the expected exchange rate for the next three years. This exchange rate is currently $.70 . John Deer's required rate of return on similar projects is 9%. Complete the worksheet below before you estimate the value of the target based on this information. Solution: Valuation of Singapore Target Based on the Assumptions Provided (numbers are in millions) Revenue Cost of Goods Sold Gross Profit Year 1 S$100 S$50 S$50 Year 2 S$110 S$55 5$55 Year 3 S$121 S$60.50 5550.50 Selling & Admin. Exp. Depreciation S$10 S$5 S$10 $$s S510 SS5 Page 7 of 11 3782 words DX C Focus FI + 10 Type hero lo search O Bi w 9:54 PM 7/18/2021 AutoSave On . E - Unit 7 through 9/szigr ment for Students Word Search Sign in x File Home Insert Draw Design Layout References Mailings Review View Help Share Comments X Cul COPY 3 Format Painter Cliebaard Calibr (Body! 11 A A Aa A ESTESA BI UX, X A SESSO Aabbcodd AaBbc.dd AaBbcc Aabbcc AaB AalbCED. AaBbcood Normal 1 No Spac... Heading 1 Heading 2 Tite Find - Replace Select Fyste Subtitle Subtle Em.. Dictate Editor Sant L Styles Editing Ecito Paragraph 1 2 3 1 5 7 Earnings Before Takes S$35 5$40 S$45.50 Tax (20%) Earnings After Taxes S$7 S$28 5$8 S$32 S$9.10 S$36.10 +Depreciation -Funds to Reinvest Sale of Firm S$5 S$3 SSS $$3 S55 SS3 S$200 Cash Flows in S$ Exchange Rate of 5$ Cash Flows in s S$30 $.70 $21 PV (9% disc. rate) Cumulative PV 41. b. Based on the information provided above, what is the value INPV) of the Singapore target? $19.266 million $39.298 million $168.160 million $128.861 million d. 42. a. b. Based on the information above, what is the Singapore target's value based on its stock price? $5 million $25 million $125 million $a7.5 million d. 13. a. b Refer to Exhibit above, the target's board has indicated that it finds a premium of 25 percent appropriate. Is that maximum percentage premium feasible given your numbers? No, they cannot afford to pay 25% premium, because the market's valuation is below John Deer's valuation stack is underpriced). No, they should not ofter any premium because the market's valuation is above lohn Deer's valuation (stock is overpriced). No, they should only pay up to 8% premium, because the market's valuation is below John Deer's valuation by B only) Yes, they should be able to nffcr 25% premium since market's valuation is well below.nhn Deer's valuation (stock is underpricel. d. Page 2 of 11 3788 words DX Focus FL + 10 Type hero lo search W 9:54 PM 7/18/2021 AutoSave O 5 . E Unit 7 through 9/szigr ment for Students Word Search Sign in x File Home Insert Draw Design Layout References Mailings Review View Help Share Comments X Cut 3 Format Painter Cleanaa Foste Aabbcodd AaBbc.dd AaBbcc Aabbcc AaB AalbCED. AaBbcood "Normal 1 No Spec... Heading 1 Heading 2 Tite Find - Replace Select Subtitle Subtle Em Calibr (Body! 11 A A A A E ES 2.1 BI UX, X A Paragraph liiiii Dictate Editor Sant Styles Editing Ecito L 1. 2 3 4 7 Questions 41 through 47 are worth 6 points each (42 points) Chapter 15 Use the following information to answer the next three questions John Deer, Inc., a U.S.-based MNC, has screened several targets. Based on economic and political considerations, only one cligible target remains in Singapore. John Deer would like you to value this target and has provides you with the following information: John Deer expects to keep the target for three years, at which time it expects to sell the firm for 200 million Singapore dollars (5$) after deducting the amount for any taxes paid. John Deer expects a strong Singapore. Consequently, the estimates for revenues for the next year are S$100 million. Revenues are expected to increase by 10% over the following two years. Cost of goods sold are expected to be 50% of revenues, Selling and administrative expenses are expected to be $10 million in each of the next three years. . The Singapore tax rate on the target's earnings is expected to be 20%. Depreciation expenses are expected to be S$5 million per year for cach of the next three years. The target will need S$3 million in cash each year to support existing operations. . The tareet's current stock orice is S$25 per share. The target has 5 million shares outstanding Any cash flows remaining after taxes are remitted by the target to John Deer, Inc. John Deer uses the prevailing exchange rate of the Singapore dollar as the expected exchange rate for the next three years. This exchange rate is currently $.70 . John Deer's required rate of return on similar projects is 9%. Complete the worksheet below before you estimate the value of the target based on this information. Solution: Valuation of Singapore Target Based on the Assumptions Provided (numbers are in millions) Revenue Cost of Goods Sold Gross Profit Year 1 S$100 S$50 S$50 Year 2 S$110 S$55 5$55 Year 3 S$121 S$60.50 5550.50 Selling & Admin. Exp. Depreciation S$10 S$5 S$10 $$s S510 SS5 Page 7 of 11 3782 words DX C Focus FI + 10 Type hero lo search O Bi w 9:54 PM 7/18/2021 AutoSave On . E - Unit 7 through 9/szigr ment for Students Word Search Sign in x File Home Insert Draw Design Layout References Mailings Review View Help Share Comments X Cul COPY 3 Format Painter Cliebaard Calibr (Body! 11 A A Aa A ESTESA BI UX, X A SESSO Aabbcodd AaBbc.dd AaBbcc Aabbcc AaB AalbCED. AaBbcood Normal 1 No Spac... Heading 1 Heading 2 Tite Find - Replace Select Fyste Subtitle Subtle Em.. Dictate Editor Sant L Styles Editing Ecito Paragraph 1 2 3 1 5 7 Earnings Before Takes S$35 5$40 S$45.50 Tax (20%) Earnings After Taxes S$7 S$28 5$8 S$32 S$9.10 S$36.10 +Depreciation -Funds to Reinvest Sale of Firm S$5 S$3 SSS $$3 S55 SS3 S$200 Cash Flows in S$ Exchange Rate of 5$ Cash Flows in s S$30 $.70 $21 PV (9% disc. rate) Cumulative PV 41. b. Based on the information provided above, what is the value INPV) of the Singapore target? $19.266 million $39.298 million $168.160 million $128.861 million d. 42. a. b. Based on the information above, what is the Singapore target's value based on its stock price? $5 million $25 million $125 million $a7.5 million d. 13. a. b Refer to Exhibit above, the target's board has indicated that it finds a premium of 25 percent appropriate. Is that maximum percentage premium feasible given your numbers? No, they cannot afford to pay 25% premium, because the market's valuation is below John Deer's valuation stack is underpriced). No, they should not ofter any premium because the market's valuation is above lohn Deer's valuation (stock is overpriced). No, they should only pay up to 8% premium, because the market's valuation is below John Deer's valuation by B only) Yes, they should be able to nffcr 25% premium since market's valuation is well below.nhn Deer's valuation (stock is underpricel. d. Page 2 of 11 3788 words DX Focus FL + 10 Type hero lo search W 9:54 PM 7/18/2021