Question: A limited is completing BLTD . On class-fut acquisition incremental cash flow are expected is to be sh. 5million as the end of current period

A limited is completing BLTD . On class-fut acquisition incremental cash flow are expected is to be sh. 5million as the end of current period the cash flows are expected to grow at a rate of 10% for 10 years. 6% For 5 years and 3% each year there after forever. the estimated discounting rate For Altd and Bltd is 12% and 14%. respectively. Required.

A)How much A LTD budget for in order to acquisition B limited. B) Assume that the following discounting rate have been provided For ea

Reward 0-10 11-15 16- infinite growth rate 10% 3% 6%

discounting rate 12 10% 5%

A ltd discounting rate 14% 8% 4%

B ltd

How much should A limited pay to acquire B Limited?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

TIME VALUE OF MONEY QUESTIONS 1. If you invest Sh.20, 000 today, how much will you have in 25 years at 12 percent? 2. You will receive Sh. 20,000 five years from now. The discount rate is 8 percent....

Management accounting assignment: Write a critique with reference list. Please help me write something as much as you could. Analysing technology investmentsfrom NPV to Strategic Cost Management...

Jason Corporation has invested in a machine that cost $76,000, that has a useful life of eight years, and that has no salvage value at the end of its useful life. The machine is being depreciated by...

1. What characteristics make this an attractive leveraged buyout? 2.What are the specific risks and benefits of each of the two strategies? 3. Which strategy should they propose and why? 4. Auction...

Read the case study information and write a strategic analysis using the following tools: PESTEL and SWOT. If you need to refresh your knowledge of these tools, refer to the assumed knowledge...

Consider the project contained in Problem 7 in Chapter 11 (California Health Center). a. Perform a sensitivity analysis to see how NPV is affected by changes in the number of procedures per day,...

CASE: Queensland Food Corp In early January 2003, the senior-management committee of Queensland Food Corp was to meet to draw up the firms capital budget for the new year. Up for consideration were...

What is a racemic mixture? Describe one method of resolving a racemic mixture.

For the block loaded triaxially as described in Prob. 223, find the uniformly distributed load that must be added in the x-direction to produce no deformation in the 2-direction.

The _ _ _ _ _ _ _ _ _ _ _ _ _ is similar to the SEC's tax adjusted return; however, the main difference is that the tax adjusted return ignores the capital gains tax effect associated with selling...

9. (15 points) A company is considering a new project that requires an investment of \$5 million. The project is expected to generate cash flows of $2 million in year 1,$3 million in year 2, and $4...

1. The Kings Speech centers on Alberts address to the British people on September 3, 1939, at the outbreak of World War II, audio recordings of which are available online. Listen to them, and...

Presentations Approaches to Conveying Information

2. While in class, select a partner and give a one- to two-minute impromptu speech on a topic of your choice. Your partner will write down both negative and positive feedback to share with you, and...