Auto Enterprises is an all-equity firm with a market value of $26 million. The company is...
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Auto Enterprises is an all-equity firm with a market value of $26 million. The company is considering a cash payment of $5.5 million to purchase all of the outstanding shares of Transit Technologies, which is an all-equity firm with a market value of $4 million. Auto Enterprises predicts that the reorganization will create a permanent incremental cash flow of $375,000 per year. Using a discount rate of 10%, estimate the post-merger value of Auto Enterprises. Auto Enterprises is an all-equity firm with a market value of $26 million. The company is considering a cash payment of $5.5 million to purchase all of the outstanding shares of Transit Technologies, which is an all-equity firm with a market value of $4 million. Auto Enterprises predicts that the reorganization will create a permanent incremental cash flow of $375,000 per year. Using a discount rate of 10%, estimate the post-merger value of Auto Enterprises.
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To estimate the postmerger value of Auto Enterprises we can calculate the net present value NPV of t... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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