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You are evaluating a potential takeover target. A junior analyst on your team provided the target FCFF forecast below. In addition, you have information about
You are evaluating a potential takeover target. A junior analyst on your team provided the target FCFF forecast below.
In addition, you have information about the target's debt, interest expenses, tax rate, and unlevered cost of equity.
Estimate the target firm's value based on its free cash flows and interest tax shield ie use compressed APV method
Estimate the target's total equity value
Estimate the target's pershare value
As an analyst for the acquirer, what's the maximum you would recommend paying for the target on a pershare basis?
Year most recently
FCFF in millions
Interest expense
Tax rate million shares outstanding
rEU Premerger debt millions
Longrun growth rate Excess cash millions
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