1. What does it mean if a company “trades at a discount”? Is Amtelecom Group Inc. (AGI) really trading at a discount? If the market value of a stock is lower than its intrinsic value‚ this stock is defined as “trades at a discount”. To figure out whether AGI stock is traded at a discount to comparable companies‚ as its management believed‚ we can simply apply multiple which comes from the average multiple of its comparable companies. Considering fluctuation of future after-tax earnings caused
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a growing tax shield is greater than the value of a constant tax shield. (c) For a given D/S‚ the levered cost of equity is greater than the levered cost of equity under MM’s original (with tax) assumptions. (d) For a given D/S‚ the WACC is greater than the WACC under MM’s original (with tax) assumptions. (e) The total value of the firm is independent of the amount of debt it uses. (Points: 20) 2. (TCO D) Which of the following statements is most CORRECT? (a) In a private placement‚ securities
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and the wireless spectrum. Thus acquisition offers more competitive service bundles on company’s service delivery. However‚ the real situation and the anticipated benefits will only be ascertained by insight analysis. MAIN METHODOLOGY ON VALUING ATC APV METHOD: It is imperative to note that‚ discounted cash flow methodology is applied in valuing Air Thread Connection Company. This is critical in establishing the viability of the anticipated acquisition. This methodology requires use of the projections
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ACF: CONGOLEUM CORPORATION Summary Congoleum Corporation has three product market segments: home furnishings‚ shipbuilding and automotive and industrial distribution. In 1979‚ First Boston Corporation bid for an LBO of Congoleum for a price per share of $38. The purpose of this analysis is to assess Congoleum as a LBO candidate and determine whether the offer made by First Boston Corporation is fair. 1. Is Congoleum a good LBO candidate? In other words‚ does this company have a lot of debt
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levels between the years 2008-2012. Owing to the uneven capital structures between 2008 and 2012‚ it will be prudent not to deploy WACC to value the target but value the target using APV. Additionally‚ WACC computation might be difficult to use since an adjustment discount rate each year the capital structures change. Assuming that the project will de-lever after 2012‚ WACC valuation will be applied to determine the terminal value. factors the interest tax shields in its calculation and in the case
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of a growing tax shield is greater than the value of a constant tax shield. (c) For a given D/S‚ the levered cost of equity is greater than the levered cost of equity under MM’s original (with tax) assumptions. (d) For a given D/S‚ the WACC is greater than the WACC under MM’s original (with tax) assumptions. (e) The total value of the firm is independent of the amount of debt it uses. (Points : 20) Question 2.2. (TCO D) Which of the following statements is most CORRECT? (a) In a
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Moreover‚ the main players and the Porter’s five forces analysis will be introduced; V. Section five will show the main macroeconomic indicators needed to perform the valuation; VI. In section six‚ Cimpor’s valuation will be computed through a DCF WACC based approach. In addition‚ a sensitivity analysis will be done as well as a relative valuation using EV/EBITDA and P/E multiples; VII. In section seven‚ my own assumptions and results will be
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that are yet to be mitigated. o Though world copper prices rised from 28.7 cents (in 1961) to 66.3 (in 1969)‚ the project does not provide the minimum required return of 20% on equity (NPV is -$17 mil). Corporate-financing the project can reduce the WACC thereby making the NPV to be positive. o In 1969 (at the time of deciding this project)‚ SM had $231 million in networth and hardly any debt apart from very good liquidity and profitability. Though SM can take the leverage on its balance sheet to
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million‚ what is the project’s APV? | | | | | A) | $3.7 million | | | | | | B) | $4.5 million | | | | | | C) | $4.7 million | | | | | | D) | $3.0 million | | | | | | | | 2 | INCORRECT | | The method to determine the net present value for an all equity firm | | | | | A) | Discounts the cash flows after tax by the levered equity rate | | | | | | B) | Discounts the cash flows after tax by the WACC | | | | | | C)
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Re: Seagate Technology 1. Describe the main terms of the Seagate Technology buyout? Why is Seagate undertaking this transaction? Is it necessary to divest the Veritas shares in a separate transaction? What are other alternative ways to create value? The primary contemplated terms would be to sell Seagate’s disk drive mfg assets including $765M in cash to Suez Acquisition Company controlled by Silver Lake Partners. The purchase would be financed by equity put up by Silver Lake and also by an‚
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