Question
You are an analyst valuing Palm and Sun Industries for a possible acquisition. Compute the Adjusted Present Value. The buyer wants cash flows evaluated for
You are an analyst valuing Palm and Sun Industries for a possible acquisition. Compute the Adjusted Present Value.
The buyer wants cash flows evaluated for 20 years and assumes a terminal value a $50 M to be discounted at 15%. Ignore taxes.
Annual cash flow from continuing operations $ 46 M. Discount at 15%.
Annual cash flow from product line expansion $ 18 M. Discount at 18%.
Annual cash flow from tax savings $ 6 M. The interest rate on debt is 6% and the tax rate is 40%. You do not need to calculate a terminal value for tax savings.
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes
8th Edition
007322359X, 9780073223599
