Ajax is a company from Amsterdam. Foyenoord, the big competitor from Rotterdam, Is Intorostod with the...

 

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Ajax is a company from Amsterdam. Foyenoord, the big competitor from Rotterdam, Is Intorostod with the offer. Ajax says that they are willing to sell for an intrinsic (enterprise) valuo based on a 10 x EBITDA multiple. The table bolow shows take over Ajax and asks you to help them financial Information of Ajax (all amounts are x €1.000). TI bors for 2020 are reallsod and the numbers for 2021 are expectations by the end of 2020. Financial Information about Ajax per end 2020 all numbers x €1.000 revenues operational costs CAPEX 2020 9.750 2021 10.000 7.200 1.250 1.000 10.250 depreciation costs book value of the assets" 10.000 *book value of the assets is the cumulative sum of historical CAPEX minus depreciation. Furthermore, the following is given. ■ Net working capital of Ajax always equals 22% of revenues. - Ajax' target debt is 50% of capital and has an average maturity of 10 years. M Ajax is not a listed company. Comparable firms, that are listed, have an average beta of 1,6 (estimated from historical returns) and an average D/V of 60% (debt to value). Ajax can borrow against 5% for 1 year and 7% for 10 years. These percentages embed a 4% premium for credit risk on top of the interest rate on risk-free government bonds. ■ Feyenoord has a better credit rating than Ajax; it is less likely to enter into financial distress. Feyenoord loans have a credit risk premium of 3% on top of the interest on Dutch risk-free government bonds. . After 2021 Ajax will grow with 5,0% per year. ▪ Ajax has no excess cash. . The income tax rate is 20%. . The market risk premium is 6% per annum. Answer the following questions. Motivate your answers and describe the steps you take to answer the questions. Assume that it is end December 2020 now. Therefore, the intrinsic value should be based on the numbers from 2021 and further. . Calculate the market value (enterprise value) of Ajax by end 2020. Is the 10 x EBITDA price realistic? . Can the return on assets of a company be lower than its WACC for a long period of time? . If you'd like your company to grow, would you choose to make the company more efficient or would you reinvest more of the profits into the company? Or both? Ajax is a company from Amsterdam. Foyenoord, the big competitor from Rotterdam, Is Intorostod with the offer. Ajax says that they are willing to sell for an intrinsic (enterprise) valuo based on a 10 x EBITDA multiple. The table bolow shows take over Ajax and asks you to help them financial Information of Ajax (all amounts are x €1.000). TI bors for 2020 are reallsod and the numbers for 2021 are expectations by the end of 2020. Financial Information about Ajax per end 2020 all numbers x €1.000 revenues operational costs CAPEX 2020 9.750 2021 10.000 7.200 1.250 1.000 10.250 depreciation costs book value of the assets" 10.000 *book value of the assets is the cumulative sum of historical CAPEX minus depreciation. Furthermore, the following is given. ■ Net working capital of Ajax always equals 22% of revenues. - Ajax' target debt is 50% of capital and has an average maturity of 10 years. M Ajax is not a listed company. Comparable firms, that are listed, have an average beta of 1,6 (estimated from historical returns) and an average D/V of 60% (debt to value). Ajax can borrow against 5% for 1 year and 7% for 10 years. These percentages embed a 4% premium for credit risk on top of the interest rate on risk-free government bonds. ■ Feyenoord has a better credit rating than Ajax; it is less likely to enter into financial distress. Feyenoord loans have a credit risk premium of 3% on top of the interest on Dutch risk-free government bonds. . After 2021 Ajax will grow with 5,0% per year. ▪ Ajax has no excess cash. . The income tax rate is 20%. . The market risk premium is 6% per annum. Answer the following questions. Motivate your answers and describe the steps you take to answer the questions. Assume that it is end December 2020 now. Therefore, the intrinsic value should be based on the numbers from 2021 and further. . Calculate the market value (enterprise value) of Ajax by end 2020. Is the 10 x EBITDA price realistic? . Can the return on assets of a company be lower than its WACC for a long period of time? . If you'd like your company to grow, would you choose to make the company more efficient or would you reinvest more of the profits into the company? Or both?

Answer rating: 100% (QA)

To calculate the market value enterprise value of Ajax by end 2020 we need to follow these steps 1 Calculate EBITDA Earnings Before Interest Taxes Dep... View the full answer