DTA=428 Rf= 5% Rm= 15 % Geared Beta of Aroma’s Industry is 1.3 (Preferred stocks are considered as debt financing) Profit Margin and Market Share of Aroma Corporation are constantly declining for last 3 years and various options are being discussed at board level for getting into a new venture with a fresh Brand Name and better product Quality and shut down the operations in existing name. A competitor has also offered to acquire operations of Aroma Corporation. On the other hand a group of investors still believe that company has potential to grow due to its old customer base which are quite satisfied by the offered services and are ready to inject more debt in the company.
*All values given in ‘000 $.
Other Information:
PAT = 320
EBIDTA=428
Rf= 5%
Rm= 15 %
Geared Beta of Aroma’s Industry is 1.3
(
Profit Margin and Market Share of Aroma Corporation are constantly declining for last 3 years and various options are being discussed at board level for getting into a new venture with a fresh Brand Name and better product Quality and shut down the operations in existing name.
A competitor has also offered to acquire operations of Aroma Corporation.
On the other hand a group of investors still believe that company has potential to grow due to its old customer base which are quite satisfied by the offered services and are ready to inject more debt in the company.
Step by step
Solved in 2 steps
