Question

A group of investors is considering buying the Wheelwright Corporation, but does not want to contribute to the company’s financial support after the purchase. Wheelwright’s management has offered the following financial statements covering last year ($M omitted):
Wheelwright paid no dividends and sold no new stock during the year. The firm’s tax rate is 30%.
a. Develop Wheelwright’s free cash flow and make a recommendation as to whether it seems to be an appropriate acquisition for the investors.
b. Assume that the investors will purchase the company subject to its existing debt ($59M). Does that change your recommendation?


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  • CreatedMay 14, 2015
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