Question: Could you please help with part d? I have been stuck on it for a while which I believe is due to issues with my

Could you please help with part d? I have been stuck on it for a while which I believe is due to issues with my intermediate rounding

Could you please help with part d? I have beenCould you please help with part d? I have been
A group of investors is intent on purchasing a publicly traded company and wants to estimate the highest price they can reasonablyjustify paying. The target company's equity beta is 1.20 and its debt-tofirm value ratio, measured using market values, is 60 percent. The investors plan to improve the target's cash flows and sell it for 12 times free cash flow in year ve. Projected free cash flows and selling price are as follows. ($ millions) Year 1 2 3 4 5 Free cash flows $40 $55 $60 $65 $ 65 Selling price $780 Total free cash flows $40 $55 $60 $55 $345 I To finance the purchase, the investors have negotiated a $550 million, five-year loan at 8 percent interest to be repaid in five equal payments at the end of each year, plus interest on the declining balance. This will be the only interestbearing debt outstanding after the acquisition. Selected Additional Information Tax rate 40 percent Risk-free interest rate 3 percent Market risk premium 5 percent ' a. Estimate the target rm's asset beta. (Round your answer to 2 decimal places.) Target nn's asset beta b. Estimate the target's unlevered, or all-equity, cost of capital (K A)- (Round your answer to 1 decimal place.) Target's unlevered, or all-equity, cost of capital (KA) m % (3. Estimate the target's all-equity present value. (Enter your answer in millions rounded to 2 decimal places.) Target's all-equity present value $ 840.98 m d. Estimate the present value of the interest tax shields on the acquisition debt discounted at KA. (Round intermediate calculations to 1 decimal place. Enter your answer in millions rounded to 2 decimal places.) Present value million

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