RiverRocks (whose WACC is 11.7%) is considering an acquisition of Raft Adventures (whose WACC is 15.6%). Whatis the appropriate discount rate for RiverRocks to use to evaluate the acquisition? Why?The appropriate discount rate for River Rocks to use to evaluate the acquisition is % (Round to onedecimal place.)Why? (Select the best choice below.)OA. Raft Adventures' WACC is the most appropriate discount rate to account for the risk of Raft Adventures cashflows.B. The risk-free rate will best account for the risk of Raft Adventures' cash flows since RiverRocks will pay cashfor the transaction.OC. RiverRocks' WACC is the most appropriate discount rate to account for the risk of Raft Adventures' cashflows.OD. An average WACC from RiverRocks and Raft Adventures will best account for the risk of Raft Adventurescash flows.

The appropriate discount rate to evaluate an acquisition is the weighted average cost of capital…

Answered: RiverRocks (whose WACC is 11.7%) is…

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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walk me through a $1 billion acquisition lbo. from year 0 to year 1. make assumptions on your own. please do step by step of the paper LBO
RiverRocks (whose WACC is 11.6%) is considering an acquisition of Raft Adventures (whose WACC is 14.1 %). What is the appropriate discount rate for RiverRocks to use to evaluate the acquisition? Why? The appropriate discount rate for RiverRocks to use to evaluate the acquisition is __ % ? (Round to one decimal place.)
Give me correct answer with explanation.
Sunland Homes Company is considering the acquisition of Oriole, Inc. early in 2025. To assess the amount, it might be willing to pay. Sunland Homes makes the following computations and assumptions. A B Oriole, Inc. has identifiable assets with a total fair value of $15,030,000 and liabilities of $8,815,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 30% higher than book value, and land with a fair value 75% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by Oridle, Inc. Oriole, Inc's pretax incomes for the years 2022 through 2024 were $1,200,900, $1,500,800, and $955,000, respectively. Sunland Homes believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it may need to consider adjustments to the following items included in pretax eamings: Depreciation on buildings (each year) C 962,900…
RiverRocks (whose WACC is 12.7%) is considering an acquisition of Raft Adventures (whose WACC is 14.6%) . What is the appropriate discount rate for RiverRocks to use to evaluate the acquisition? Why? The appropriate discount rate for RiverRocks to use to evaluate the acquisition is %. (Round to one decimal place.)
In early 2024, Menz Corporation acquired NeuroLab to obtain technology that NeuroLab was in the process of developing. The total acquisition cost included $2 million for this technology. At the time of acquisition, the technology had not yet reached the point of technological feasibility. During the remainder of 2024, Menz spent an additional $1 million to improve the technology, which then reached the point of technological feasibility by the end of the year. The new technology was expected to provide benefits to Menz over the subsequent five years. What amount of research and development expense would Menz record in 2024? Multiple Choice $2 million $3 million O $1 million $0
Assume that a drilling machine is acquired for the following consideration: cash: $200,000 shares: 20,000 shares with a market value of $4.50 each Machine: Cost $100,000, accumulated depreciation, $75,000, fair value $37,000 The buying company also agrees to assume the liability of the selling company’s accounts payable of $25 000 as part of the drilling machine acquisition. Required: Calculate the acquisition cost of the drilling machine
RiverRocks (whose WACC is 12.7%) is considering an acquisition of Raft Adventures (whose WACC is 15.3%). The purchase will cost $100.5 million and will generate cash flows that start at $14.1 million in one year and then grow at 4.2% per year forever. What is the NPV of the acquisition? The net present value of the project is $ million. (Round to two decimal places.)
Suppose that an acquirer decides to pay a 25% premium to buy Uber. The book value of Uber’s net assets is $6.7 million. The fair value of Uber’s net assets is estimated at $7 million. What amount of goodwill will be recorded in this acquisition? Question 14Answer a. $75,000 b. $8,750,000 c. $1,675,000 d. $1,750,000

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