56 13 Net income before income taxes $74 $84 $99 $6 c 14 16 22 1 Provision for income taxes Net income $60 $68 $77 $5 a In the first quarter of 1995‚ sales were $903‚000 and net income was $7‚000. Operating expenses include a cash salary for Mr. Clarkson of $75‚000 in 1993; $80‚000 in 1994; $85‚000 in 1995; and $22‚500 in the first quarter of 1996. c Clarkson Lumber was required to estimate its income tax liability for the current tax year and pay four quarterly estimated
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Q1. If we want to do the stand-alone-valuation for Framedia at the end of 2005‚ we should calculate the free cash flow to firm after 2005 and the residual value of Framedia and then discount all the cash flows to the end of 2005. Because it’s stand-alone-valuation we should do‚ we need to value the whole firm and then compare the stand-alone-value with the synergistic value after the merger. So it’s the firm value we should compare with. We can get the effective tax rate by dividing the profit before
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What are the exit alternatives for this investment? Create a DCF Model for Toys R Us. Also‚ add an LBO analysis by including the debt payments on principal and interest to evaluate the firm’s ability to service a large amount of debt from its free cash flows. Make projections you feel are reasonable given the information provided‚ and provide sensitivity analysis to some of your key assumptions. What do you think is an appropriate discount rate for this
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controllable and uncontrollable changes to affecting the target market (4). Blockbuster video store is a primary example of a retailer that has struggled with finding the target market that will make the company profitable. In the past‚ Blockbuster has seemed to focus its target market on the tweens‚ teens‚ and generation Y populations when marketing their products. As
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Mercury would be profitable and at what maximize price could AGI offer in order to acquire the division. Analysis In order to achieve the above set goal‚ Liedtke needs to analyze the financial data from 2006 to 2011 (Exhibit 6 and 7)‚ and calculate free cash flows. This data will enable him to identify the strengths and weaknesses of this acquisition. Following is the snapshot of AGI and Mercury operations based on year 2006‚ the last year before AGI plans to acquire Mercury. Active Gear‚ Inc Mercury
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RE: Mercury Athletic valuation and acquisition recommendations We believe that Mercury is an appropriate target for AGI since an acquisition can be an excellent growth opportunity. First‚ through the acquisition AGI can take the advantages of some existing synergies. Acquiring Mercury would expand AGI’s business size and consequently produce the “one plus one is greater than two” effect. This acquisition would double AGI’s revenues‚ increase its leverage with contract manufacturers‚ and also help
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of Deltex. First‚ we calculated the discount factor by using average unlevered beta of US independent bottlers‚ US 10 year Treasury bond as risk free rate and assuming market risk premium 10%. We came up with 9.83% of WACC. Next‚ we calculated Deltex free cash flow and terminal value and then converted them into US dollar value. Now with WACC and total cash flow‚ we had NPV of the company. So we deducted current debt from NPV and came up with the value of US$360M investment equal to 59.99% of Deltex
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further valuate Calaveras Vineyards. Sales increased from $2.4 million in 1990 to $2.8 million in 1991. In 1992 Calaveras started to produce premium wines with increasing average industry prices. Although sales decreased from 1992 to 1993‚ cash flow improved immensely. Increasing the average price‚ and introducing premium wines‚ allowed Calaveras to gain a higher profit margin. Based on the pro forma historical financial statements‚ a comparative analysis has been completed to identify
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Connections. In particular‚ the following issues must be considered: Valuation of cash flows in the relevant period Estimating terminal value A. Procedure 1. The cash flows (without synergy) were taken as provided for 5 years along with adjustment for Net working capital changes. 2. WACC was calculated for various D/V ratios 3. Terminal Value of the firm was determined using P/E Multiple of 19.1 4. Valuation done for the cash flows and terminal value at a discount rate corresponding to industry average
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Bloomberg Assessment (BAT) SAMPLE TEST QUESTIONS I. Economics You have just been transferred to Sydney and cover Australia and New Zealand on the sovereign research desk. Australia and New Zealand operate under a free trade agreement. No barriers to trade exist‚ and both currencies float. In this environment‚ an increase in expected inflation in New Zealand would most likely cause what effect? Choose One Answer o o o An increase in exports from New Zealand to Australia An increase in
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