Evaluating the market and AdTec, you assume that AdTec is going to produce the following cash-flows in the coming years (figures in mn€):

  

*Ref) the risk-free rate is 1.08%

*Ref) acquisition price of 450mn EUR

Question)  Given the fact that the current asset beta of A company is 0.9, what are impacts of the acquisition on the systematic risk of Company A if the company A plans on acquiring AdTec?

What about the unsystematic risk that the new company is exposed to?

Transcribed Image Text:

Years Projected Cashflow 1 120 2 140 3 180 4 200 5 210 Years Projected Cashflow 1 120 2 140 3 180 4 200 5 210 Years Projected Cashflow 1 120 2 140 3 180 4 200 5 210 Years Projected Cashflow 1 120 2 140 3 180 4 200 5 210

Answer rating: 100% (QA)

Impact of Acquisition on AdTec and Company As Risk Systematic Risk Market Risk The acquisition of AdTec is likely to have a minimal impact on the syst... View the full answer