I've been resolved the problem but could you help me to give an interpretation of result, which method of those three could be recommended for the company ?
I've been resolved the problem but could you help me to give an interpretation of result, which method of those three could be recommended for the company ?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
I've been resolved the problem but could you help me to give an interpretation of result, which method of those three could be recommended for the company ?
![Discounted Cash Flow Method
We can discount cash flow's using Track's WACC
Present Value of Earnings
Present Value of Asset Sale
Present Value of Synergy
Total Present Value of Money
Plus
(£47.4m x 1.02) = £483.5m
(0.12 -0.02)
£25m
1.12
-£5m
0.12
£22.3m
= £41.7m
= £483.5m + £22.3m + £41.7m = £547.5m](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F37cee5b4-7232-4bc9-a381-db8f85a59b51%2Fc39da8ca-96ef-4b74-98ee-2f4e35ca7242%2Fwn2nise_processed.png&w=3840&q=75)
Transcribed Image Text:Discounted Cash Flow Method
We can discount cash flow's using Track's WACC
Present Value of Earnings
Present Value of Asset Sale
Present Value of Synergy
Total Present Value of Money
Plus
(£47.4m x 1.02) = £483.5m
(0.12 -0.02)
£25m
1.12
-£5m
0.12
£22.3m
= £41.7m
= £483.5m + £22.3m + £41.7m = £547.5m
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