Question: Using the APV method, estimate the value of Ideko and the NPV of the deal using the continuation value you calculated in Problem 13 and

Using the APV method, estimate the value of Ideko and the NPV of the deal using the continuation value you calculated in Problem 13 and the unlevered cost of capital estimate in Section 19.4. Assume that the debt cost of capital is 6.8%; Ideko’s market share will increase by 0.5% per year; investment, financing, and depreciation will be adjusted accordingly; and the projected improvements in working capital do not occur (i.e., the assumptions in Problem 6).

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The equity value is 80 million so the NPV of the deal is 90 53 27 million Year 2005 2006 2007 2008 ... View full answer

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