In class we discussed the following example of valuing the goodwill amortization in M&A: Term 15 Cost of debt 0.07 Tax 0.40 Example ($ ) Stock Purchase Price $60,000,000 Purchase Price Allocation $35,000,000 Goodwill Allocation $25,000,000 Annual Amortization Tax Shield $666,667 Annuity Factor (15 years, 7%) 9.11 Annuity PV $6,071,943 Now, assume that the tax rate is 35% and that the cost of debt is 10%. What will be the value of present value of the anticipated amortization deductions?

Answer rating: 100% (QA)

Sure Assuming a tax rate of 35 and a cost of debt of 10 the present value of the anticipated amortiz... View the full answer