HAWK Inc. who is a publicly traded company is considering acquiring EAGLE Inc. which is a...

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HAWK Inc. who is a publicly traded company is considering acquiring EAGLE Inc. which is a private company. Please use the information and methods taught to you in class and construct an NPV analysis. Your conclusion should state whether this acquisition is a good idea. Remember that you should first find the price of EAGLE Inc using the appropriate WACC and then evaluate the acquisition from HAWK'S perspective as an investment. The next page includes the information you are provided. Debt/Equity Tax Rate Beta S&P 500 Return 10-year T- Bond Growth Rate Cost of Debt Anticipated FCFs for EAGLE Year 1 Year 2 Year 3 Year 4 Year 5 Company A Company B 2/3 Company C Company D See Bond info Maturity Coupon Rate 15% 2.3 15% Comparable Companies to EAGLE Inc 2% 4% $540,000 ($120,000) $220,000 $300,000 $310,000 Bond Information for HAWK Inc. Price Face Value Years to Debt (in millions) 30 10 50 35 $950 $1,000 1/3 N/A 15% 12 10% Paid monthly 15% Equity (in millions) 2% 6% 5% 30 50 80 20 Stock Price (market) $5 $7 $10 $2 # Shares Outstanding 8,000,000 11,000,000 7,000,000 9,000,000 Beta 1.3 1.1 3.0 2.5 HAWK Inc. who is a publicly traded company is considering acquiring EAGLE Inc. which is a private company. Please use the information and methods taught to you in class and construct an NPV analysis. Your conclusion should state whether this acquisition is a good idea. Remember that you should first find the price of EAGLE Inc using the appropriate WACC and then evaluate the acquisition from HAWK'S perspective as an investment. The next page includes the information you are provided. Debt/Equity Tax Rate Beta S&P 500 Return 10-year T- Bond Growth Rate Cost of Debt Anticipated FCFs for EAGLE Year 1 Year 2 Year 3 Year 4 Year 5 Company A Company B 2/3 Company C Company D See Bond info Maturity Coupon Rate 15% 2.3 15% Comparable Companies to EAGLE Inc 2% 4% $540,000 ($120,000) $220,000 $300,000 $310,000 Bond Information for HAWK Inc. Price Face Value Years to Debt (in millions) 30 10 50 35 $950 $1,000 1/3 N/A 15% 12 10% Paid monthly 15% Equity (in millions) 2% 6% 5% 30 50 80 20 Stock Price (market) $5 $7 $10 $2 # Shares Outstanding 8,000,000 11,000,000 7,000,000 9,000,000 Beta 1.3 1.1 3.0 2.5

Answer rating: 100% (QA)

To conduct the NPV analysis for the acquisition of EAGLE Inc by HAWK Inc we need to follow these steps 1 Calculate the cost of equity for EAGLE Inc using the Capital Asset Pricing Model CAPM 2 Calcula... View the full answer