Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following questions are based on the company Merck. Alternative strategies (giving advantages and alternatives for each)Pro-Forma Financial Statements (I/S, B/S and Statement of Cash

The following questions are based on the company Merck.

Alternative strategies (giving advantages and alternatives for each)Pro-Forma Financial Statements (I/S, B/S and Statement of Cash Flows) with deltas out 3 years and analysis Each year must have 2 columns: 1 with your strategy and 1 without your strategy.Include Pro-Forma ratios for the first year out with deltas contrasting from the most current years ratios.Net Present Value analysis of proposed strategys new cash flow and EPS/EBIT analysis NOTE: To construct the first cash flow (cf1) at the very minimum, the new revenue from your strategy(s) must be discounted back to the present value by calculating EBIT and that figure will be your cfn for each year. cf0 (initial cost of your strategy), cf1 (discounted cash flow first year), r (opportunity cost of capital, the rate of the next best alternative use of cash/debt/equity resources).1.Alternative strategies (givingadvantages and alternatives for each)

2.Pro-Forma Financial Statements (I/S,B/S and Statement of Cash Flows) with deltas out 3 years and analysis Each year must have 2 columns: 1 with your strategy and 1 without yourstrategy.

a.Include Pro-Forma ratios for thefirst year out with deltas contrasting from the most current years ratios.

3.Net Present Value analysis ofproposed strategys new cash flow and EPS/EBIT analysis NOTE: To construct the first cash flow (cf1) at the very minimum,the new revenue from your strategy(s) must be discounted back to the presentvalue by calculating EBIT and that figure will be your cfn for eachyear. cf0 (initial cost of your strategy), cf1(discounted cash flow first year), r (opportunity cost of capital, the rate ofthe next best alternative use of cash/debt/equity resources).

NPV=-cf0+ cf11+r1+cf21+r2+cf31+r3cfn1+rn

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Core Concepts Financial Analysis

Authors: Gary Giroux

1st Edition

047146712X, 9780471467120

More Books

Students also viewed these Accounting questions