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Based on the estimated future incremental cash flows, what is the highest price (total amount, not per share) NCC should offer Portable for a
Based on the estimated future incremental cash flows, what is the highest price (total amount, not per share) NCC should offer Portable for a cash acquisition? Assume a cost of capital of 12%. 2) If NCC planned to finance the acquisition cost from question #1 mostly with bonds, how might the issuance of each type of bond below affect the firm? Include in your answer the characteristics and pros and cons of each bond type for the company. Discuss several pros and cons for each, from the company's perspective. A. Straight bonds B. Convertible bonds C. Bonds with stock warrants attached 3) A. What is the ratio of exchange in a stock swap acquisition if NCC pays $19 per share for Portable? Explain. B. What effect will this stock swap have on the EPS of the original shareholders of each company? Explain. 4) One financial option for NCC to buy Portable is to use a stock swap, as detailed in question 3. What alternative merger proposals could NCC make to Portable shareholders to pay for the acquisition? Discuss at least 3. 5) If Portable were a foreign-based company, what impact would this have on the analysis? Describe added costs, regulations, benefits, international cash flow factors and risks (economical, political, currency, tariffs). Include each of these items in the discussion and give brief examples of each to support them. 6) A. The case specifically mentions diversifying revenue streams as a merger/acquisition motive. Detail two other merger benefits (motives) that could potentially be applicable in this case. B. Detail two post-merger impediments that, if existed, could potentially threaten the short- or long-term success of the acquisition. 7) Based solely on the financial analysis, should NCC move forward with the acquisition? Why? (Question 3b is important here.) H Sign Ir x SPO FINAN X SPC Acade X File Apps Hcc HawkNet - Hillsbor... y! Yahoo - login YouTube f Facebook - Log In o... FIN4414 Case 2 instructions NCC-Portable 1 2 3 E FIN44 X Type here to search Log in x C:/Users/Starleana91/Downloads/FIN4414%20Case%202%20instructions%20NCC-Portable.pdf Learni X Si Cours X Log In X 1/3 | Year 1 Year 2 Year 3 Year 4 Year 5 Year 6-30 Domino's Home Pa... Fox Full Episodes | Empi... Target : Expect Mor... SPC Financ X - a 175% + Table 1: Estimated Incremental Cash Flows over 30 years for combined company Math X $ 19,400,000 $ 19,100,000 $ 20,100,000 $ 22,550,000 $ 27,100,000 $ 28,200,000 (per yr.) SPC SPC S X C W Sign in x Ink Cartridges - Pri... Aol AOL - X Solve X Q Wet Seal | Clothing..... Table 2: Portable Coffee Express Earnings EPS EPS Year 2011 2012 2013 2014 $ 1.85 $ 2.00 $ 2.20 $ 2.65 Year 2015 2016 2017 2018 + A $ 2.95 $ 3.25 $ 3.45 $ 3.70 4) 0 X : Reading list 12:26 PM 4/27/2021 1 Assets Cash Table 3: Portable Coffee Express Balance Sheet (December 31, 2018) Liabilities & Equity Current liabilities Accounts Receivable Inventory Land Fixed assets (net) Total Assets $ 3,000,000 2,000,000 7,000,000 7,250,000 14,750,000 $ 34,000,000 Table 4: NCC and Portable Item Earnings available for common stock Number of shares of Common stock Market price per share ("Estimated by NCC) Mortgages payable Common stock Retained Earnings Total Liabilities & Equity additional data (December 31, 2018) NCC Portable $29,000,000 $12,580,000 7,000,000 $ 43.30 $ 3,600,000 5,900,000 14,800,000 9,700,000 $ 34,000,000 3,400,000 $ 19*
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