Whether the acquisition price is a good investment opportunity. Introduction: The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

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Chapter 19.1, Problem 2CC

Summary Introduction

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

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Consider the following simplified financial statements for the Yoo Corporation (assuming no income taxes): Income Statement Balance Sheet Sales Costs $ 40,000 Assets 34,160 $26,000 Debt Equity $ 7,000 19,000 Net income $ 5,840 Total $26,000 Total $26,000 The company has predicted a sales increase of 20 percent. Assume Yoo pays out half of net income in the form of a cash dividend. Costs and assets vary with sales, but debt and equity do not. Prepare the pro forma statements. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.) Pro forma income statement Sales Costs $ 48000 40992 Assets $ 31200 Pro forma balance sheet Debt 7000 Equity 19000 Net income $ 7008 Total $ 31200 Total 30304 What is the external financing needed? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) External financing needed $ 896

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An individual is investing in a market where spot rates and forward rates apply. In this market, if at time t=0 he agrees to invest £5.3 for two years, he will receive £7.4 at time t=2 years. Alternatively, if at time t=0 he agrees to invest £5.3 at time t=1 for either one year or two years, he will receive £7.5 or £7.3 at times t=2 and t=3, respectively. Calculate the price per £5,000 nominal that the individual should pay for a fixed-interest bond bearing annual interest of 6.6% and is redeemable after 3 years at 110%. State your answer at 2 decimal places.

Answer 2

Question

Chapter 19.1, Problem 2CC

Summary Introduction

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

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Answer 3

Question

Chapter 19.1, Problem 2CC

Summary Introduction

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Expert Solution & Answer

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Answer 4

Question

Chapter 19.1, Problem 2CC

Summary Introduction

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Expert Solution & Answer

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Answer 5

Chapter 19.1, Problem 2CC

Summary Introduction

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Answer 6

Chapter 19.1, Problem 2CC

Summary Introduction

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Answer 7

Chapter 19.1, Problem 2CC

Summary Introduction

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Answer 8

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Answer 9

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Answer 11

Ch. 19.1 - Prob. 1CC Ch. 19.1 - Prob. 2CC Ch. 19.2 - Prob. 1CC Ch. 19.2 - Prob. 2CC Ch. 19.3 - What is a pro forma income statement?Ch. 19.3 - Prob. 2CC Ch. 19.4 - Prob. 1CC Ch. 19.4 - Prob. 2CC Ch. 19.5 - Prob. 1CC Ch. 19.5 - Prob. 2CC

Whether the acquisition price is a good investment opportunity. Introduction: The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Solution Summary: The author explains that the primary way to estimate the firm's value can be determined by valuing the comparable.

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Want to see the full answer?

Chapter 19 Solutions

Whether the acquisition price is a good investment opportunity. Introduction: The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Solution Summary: The author explains that the primary way to estimate the firm's value can be determined by valuing the comparable.

To discuss: Whether the acquisition price is a good investment opportunity. Introduction: The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.

Want to see the full answer?

Chapter 19 Solutions

To discuss: Whether the acquisition price is a good investment opportunity.

Introduction:

The primary way to estimate the firm’s value can be determined by valuating the comparable. Multiples used in valuing the comparable are ratio of enterprise value to sales and price-earnings ratio.