Silverstone Technologies, Inc. is considering acquiring a software company for $500 million. Since Silverstone has a large cash reserve, they plan to use $200 million in debt financing and invest $300 million in equity to acquire the company. What weights should Silverstone use in computing WACC for this acquisition?
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- A successful software company is approached by two larger firms for a possible buyout. The current value of the company based on recent financial statements is $5 million. The two bids from the two larger firms are $3 million and $6 million. Both offers are bona fide real offers. What is the market value of the company? What is book value?Orca Industries is considering the purchase of Shark Manufacturing. Shark is currently a supplier for Orca, and the acquisition would allow Orca to better control its material supply. The current cash flow from assets for Shark is $6.4 million. The cash flows are expected to grow at 9 percent for the next five years before leveling off to 6 percent for the indefinite future. The cost of capital for Orca and Shark is 13 percent and 11 percent, respectively. Shark currently has 3 million shares of stock outstanding and $25 million in debt outstanding. What is the maximum price per share Orca should pay for Shark? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16, Price per share $ 45 47Cloth plc has estimated the potential cash flows that would arise if they were successful in taking over one of their French customers, Trendy Limited. Following the proposed takeover, Trendy Limited would become Cloth (France), a subsidiary of Cloth plc.Cloth (France)’s functional currency would be the Euro. The estimated cash flows for the project are given below and management considers that a discount rate of 10% reflects the riskiness of the project. Cloth plc is planning to repatriate all net cash flows generated by the subsidiary at the end of each year in the form of an annual dividend payment. Year 0 Year 1 Year 2 Year 3 Total cash inflows (Euro million) 0 30 22 21Total cash outflows (Euro million) 30 16…
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