Question: Given the information below, using the discounted cash flow method to determine the market value of the target company--ABC in an acquisition transaction: Year 2022

Given the information below, using the discounted cash flow method to determine the market value of the target company--ABC in an acquisition transaction:

Year 2022 initial investment for possessing the acquisition: $15 million

Year 2023 projected net cash flow from firm ABC: $6 million

Year 2024 projected net cash flow from firm ABC: $8 million

Year 2025 projected net cash flow from firm ABC: $9 million

Year 2026 projected net cash flow from firm ABC: $10 million

Year 2027 projected net cash flow from firm ABC: $12 million

Discount rate: 20% Industry multiple: 10

The market value of firm ABC for this acquisition transaction is $_____ million.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Please help. 74 75 78 Given the information below, using the discounted cash flow method to determine the market value of the target company--ABC in an acquisition transaction: 81 Year 2022 initial...

D.M. WENCESLAO AND ASSOCIATES INCORPORATED INITIAL PUBLIC OFFERING On June 11, 2018, some troubling news was released about D.M. Wenceslao and Associates Incorporated (DMW), a Philippine-based...

please I need all the discussion questions answer based on the case that is given below the questions Discussion Questions 1. Estimate the firm's cost of equity and after tax cost of debt? 2....

Please help me find details of Target's fiscal 2018 liabilities, calculate the time-earned interest rate, and compare to Kohl's corporation if possible. If not, thank you anyway! Financial Statement...

5.1Topical Case: Enviro-Lawn Consider the following real world case that was published in Journal of Business Education, Vol. 2, Spring, 2001, pp. 2330. It is reprinted here with permission from the...

After you read all of the comments above which is my attempt to interpret the dollar amounts associated with Indicated value with voting rights expressed as a dollar amount, Discount for Lack of...

filling up the blanks of the following tables. Revenue growth attributed to BMN in the cash flow model was 10% in fiscal 2022 and 15% in fiscal 2023 Professional judgment framework Income projections...

Financial Statements analysis Multiple Choice questions 1.Which of the following items should NOT be projected as a percentage of revenue? A Accounts Receivable B Accrued Expenses C Inventory D...

The following information relates to Questions 13-28 First Life Insurance Company, Led, a life insurance company located in the United Kingdom, maintains a stock and bond portfolio and also invests...

On April 12, 2020, Prism Ltd., a camera lens manufacturer, paid cash of $560,600 for real estate plus $30,200 cash in closing costs. The real estate included land appraised at $204,680; land...

1. Which of the following describes the result of calculating a financial ratio? a. An asset as a percent of revenue b. The numerator expressed in terms of one unit of the denominator c. Net income...

Webster's Words has a printing press which they are not using at the present time. In fact, they have not used this equipment for two years. The equipment has no market value because it has been...

An enzyme called carbonic anhydrase catalyzes both the forward and reverse reactions for the hydration of CO2 according to H2O(l)+CO2(aq)HCO3(aq)+H+(aq) Carbon dioxide is produced in tissue as one of...

=+worldbank.org, is one place to fi nd such data.) How might you fi gure out which of these factors is most responsible for the observed income

=+ f. Based on your analysis, is an increase in u an unambiguously good thing for the economy? Explain.

=+ a. The men of Solovia stay at home performing household chores, while the women work in factories. If some of the men started working outside the home so that the labor force increased by 5...