Question: Please answer everything Value options are 1. 9.98% 13.66% 11.68% 15.36% 2. 28.47 million 72.99 million 70.19 million 54.05 million 3.17.39 million 16.58 million 18.09
4 Merger analysis Adjusted present value (APV) approach Aa Aa BTR Warehousing, which is considering the acquisition of Galaxy Sun Corp., estimates that acquiring Galaxy Sun will result in an incremental value for the firm. The analysts involved in the deal have collected the following information from the projected financial statements of the target company Data Collected (in millions of dollars) EBIT Interest expense Debt Year 1 Year 2 Year 3 $9.0 $10.8 $13.5 4.8 37.8 Total net operating capital 15.1 107.1 109.1 4.0 4.4 29.7 35.1 Galaxy Sun Corp. is a publidy traded company, and its market-determined pre-merger beta is 1.40. You also have the following information about the company and the projected statements: Galaxy Sun currently has a $34.00 million market value of equity and $22.10 million in debt * The risk-free rate is 6%, there is a 8.10% market risk premium, and the Capital Asset Pricing Model produces a pre-merger required rate of return on equity r, of 17.34%. Galaxy Sun's cost of debt is 8.00% at a tax rate of 35%. The projections assume that the company will have a post-horizon growth rate of 4.00%. Current total net operating capital is $102.0, and the sum of existing debt and debt required to maintain a constant capital structure at the time of acquisition is $27 million The firm does not have any nonoperating assets such as marketable securities
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