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Use the data below to answer the following question: 26.1f ABC became an acquisition target and another company offered $450 million to buy it, and
Use the data below to answer the following question: 26.1f ABC became an acquisition target and another company offered $450 million to buy it, and the current market price represents the fair value of equity, then: ABC Corp. Year o Cash & equivalents $40 million Interest expense $7.2 million Capital Expenditures per share $2.4 Working Capital Investment per share $1.7 Market Value of Equity per share $56 Target debt ratio 30% Cost of equity (CAPM) 12% Depreciation (per share) $1.8 Tax rate 37.5% Net Income (earnings) per share$5 Shares outstanding 5 million Earnings, capex, depreciation and working capital will all grow at 5% in the future. O ABC management should not take is since $450 is more than the total value of the firm O ABC management should not take is since $450 is less than the total value of the firm O ABC management should take is since $450 is more than the total value of the firm O ABC management should take is since $450 is less than the total value of the firm Use the data below to answer the following question: 26.1f ABC became an acquisition target and another company offered $450 million to buy it, and the current market price represents the fair value of equity, then: ABC Corp. Year o Cash & equivalents $40 million Interest expense $7.2 million Capital Expenditures per share $2.4 Working Capital Investment per share $1.7 Market Value of Equity per share $56 Target debt ratio 30% Cost of equity (CAPM) 12% Depreciation (per share) $1.8 Tax rate 37.5% Net Income (earnings) per share$5 Shares outstanding 5 million Earnings, capex, depreciation and working capital will all grow at 5% in the future. O ABC management should not take is since $450 is more than the total value of the firm O ABC management should not take is since $450 is less than the total value of the firm O ABC management should take is since $450 is more than the total value of the firm O ABC management should take is since $450 is less than the total value of the firm
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