Jomoro Ltd would like to acquire Madura Ltd. Jomoro has made the following estimates for Madura Ltd. 

1. An estimated enterprise value of $420 million 

2. Long-term debt whose market value is $32 million 

3. Estimated Present value of finance lease recorded as an operating lease $18millon 

4. Excess cash balances $9 million 

5. Estimated present value of currently unused licenses of $8 million 

6. Unrecorded patents are estimated to generate net cash flows of $600.000in each of the next 5 years. The estimated risk associated with these cash flows is 10%. 

7. Estimated Present value of future litigation costs of $4 million Shareholders of Madura Ltd are demanding an acquisition premium of 35%.

Required: 

How much should Jomoro pay to acquire Madura?

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E3-33. Determine Marginal Tax Rate and the Tax on Operating Profit ANALYST ADJUSTMENTS 3 Amgen Inc. reported the following in its tax footnote to its 2018 financial statements. Use this informa- tion to answer the requirements. The reconciliations between the federal statutory tax rate applied to income before income taxes and our effective tax rate were as follows. Year ended December 31 Federal statutory tax rate 2017 Tax Act, net repatriation tax.. Foreign earnings... 2017 Tax Act, net deferred tax remeasurement. Credits, Puerto Rico Excise Tax... 2017 Tax Act, net impact on intercompany sales. Interest on uncertain tax positions. Credits, primarily federal R&D Share-based payments Other, net. Effective tax rate. 2018 21.0% Interest expense, net Interest and other income, net....... Provision for income taxes. (4.3) (2.5) (1.8) 1.2 (0.8) (0.2) (0.5) 12.1% 2017 35.0% 70.7 (15.8) (6.9) (2.2) ... $1,392 674 1,151 - 0.6 (0.6) (0.7) (0.7) 79.4% 2016 35.0% (15.5) (2.3) 0.5 (0.7) (1.3) a. Determine the tax rate that we should use to compute tax on operating profit for each year. b. Compute the amount of tax on net operating profit for 2018. The company reported the following items on its 2018 income statement ($ millions). = 15.7% E3-33. Determine Marginal Tax Rate and the Tax on Operating Profit ANALYST ADJUSTMENTS 3 Amgen Inc. reported the following in its tax footnote to its 2018 financial statements. Use this informa- tion to answer the requirements. The reconciliations between the federal statutory tax rate applied to income before income taxes and our effective tax rate were as follows. Year ended December 31 Federal statutory tax rate 2017 Tax Act, net repatriation tax.. Foreign earnings... 2017 Tax Act, net deferred tax remeasurement. Credits, Puerto Rico Excise Tax... 2017 Tax Act, net impact on intercompany sales. Interest on uncertain tax positions. Credits, primarily federal R&D Share-based payments Other, net. Effective tax rate. 2018 21.0% Interest expense, net Interest and other income, net....... Provision for income taxes. (4.3) (2.5) (1.8) 1.2 (0.8) (0.2) (0.5) 12.1% 2017 35.0% 70.7 (15.8) (6.9) (2.2) ... $1,392 674 1,151 - 0.6 (0.6) (0.7) (0.7) 79.4% 2016 35.0% (15.5) (2.3) 0.5 (0.7) (1.3) a. Determine the tax rate that we should use to compute tax on operating profit for each year. b. Compute the amount of tax on net operating profit for 2018. The company reported the following items on its 2018 income statement ($ millions). = 15.7%

Answer rating: 100% (QA)

420 million enterprise value 32 million longterm debt 18 mil... View the full answer