Please provide the proper response to the following statements: 1. Barbie: I think we may want...

   

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Please provide the proper response to the following statements: 1. Barbie: I think we may want to sell off all of our divisions except our core business, division A. With the exception of division B, which has some synergies with division A, I don't see any real positive or negative synergies with the other divisions. Ken: I don't like Barbie's idea. I recieved a call from an investment banker asking if we would sell Division C for $40 M. Based on our APV and levered cash flow divided by our unlevered cost of equity i got a number far less than $40 M. Jason: instead of talking about selling, why don't we take our excess cash and repurchase stock? Deb: I would rather restructure our assets and the valuation behind it and not worry about the financial side. I received a call about Division D. They seem to be willing to pay up to $55 M for that division. I did the FTE, WACC and APV and got different answers to each. None of which were as high as $55 M. Bea: I want to go public. I would like to have an IPO with Division Q. Please provide the proper response to the following statements: 1. Barbie: I think we may want to sell off all of our divisions except our core business, division A. With the exception of division B, which has some synergies with division A, I don't see any real positive or negative synergies with the other divisions. Ken: I don't like Barbie's idea. I recieved a call from an investment banker asking if we would sell Division C for $40 M. Based on our APV and levered cash flow divided by our unlevered cost of equity i got a number far less than $40 M. Jason: instead of talking about selling, why don't we take our excess cash and repurchase stock? Deb: I would rather restructure our assets and the valuation behind it and not worry about the financial side. I received a call about Division D. They seem to be willing to pay up to $55 M for that division. I did the FTE, WACC and APV and got different answers to each. None of which were as high as $55 M. Bea: I want to go public. I would like to have an IPO with Division Q.

Answer rating: 100% (QA)

1 Ken is right to be cautious of Barbies proposal without fully evaluating each division Selling bas... View the full answer