Valuation of AirThread Connections By: Chris Cruz Zach Hatoum Michael Peña Kevin Reilly Ali Zaidi American Cable Communications (ACC) 48.5 million homes had ACC cable passing through 24.1 million video subscribers 13.2 million high speed internet 4.6 million landline telephone Expected consolidated revenue of $30.9 billion (2007) Expected Net Income of $2.6 billion (2007) AirThread Connections One of the largest regional wireless companies in the United States Service more than
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A) There are two potential sources of cash flows from owning a stock. B) An investor will be willing to pay a price today for a share of stock up to the point that this transaction has a zero NPV. C) An investor might generate cash by choosing to sell the shares at some future date. D) Because the cash flows from stock are known with certainty‚ we can discount them using the risk-free interest rate. Answer: D Explanation: A) B) C) D) Because these cash flows are risky‚ we cannot discount them using
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Use Tables 3 and 4 to forecast free cash flow for Reeby Sports from 2004 to 2010. What is the present value of these cash flows in 2003‚ including PV(terminal value) in 2010? Free Cash Flow 2004 2005 2006 2007 2008 2009 2010 2011 Terminal = After-tax profits 5‚25 5‚70 3‚00 3‚40 4‚35 6‚00 7‚61 7‚60 + Depreciation 2‚40 3‚10 3‚12 3‚17 3‚26 3‚44 3‚68 3‚94 - CapEx 4‚26 10‚50 3‚34 3‚65 4‚18 5‚37 6‚28 8‚50 - Inc. In NWC 1‚39 0‚60 0‚28 0‚42 0‚93 1‚57 2‚00 FCF 2‚00 -2‚30 2‚50 2‚50 2‚50 2‚50 3‚01
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the processing plant can easily be decomposed into three distinct steps first‚ find the value of the foreseeable free cash flows. Next‚ calculate the terminal value of the project. Finally‚ take the present value of those flows. The next few paragraphs walk through each of these steps in order of progression. In the first step we analyze the data and calculate the free cash flow from the inception of the project to the foreseeable future. We opted to use Exhibit 7‚ which incorporates an 11% inflation
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| | ECONM2021Cases in Financial Management | THE TIMKEN COMPANY | (Word Count: 4000) | Candidate Nos.380843767942568 | | Executive Summary The Timken Company – a leader in the bearing industry‚ is considering acquiring the Torrington Company from Ingersoll-Rand. Torrington – an engineering solutions segment of the Ingersoll-Rand. The main motive of acquisition is to enhance Timken’s market share and product base. Operating synergies are highly expected from this merger with 80 million
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EXECUTIVE SUMMARY This report will analyze the price Monmouth should pay to acquire RTC by using DCF‚ market multiple‚ and stock exchange approaches. Rationales on why RTC is a good acquisition by Monmouth RTC is a good acquisition by Monmouth as it falls under their three established criteria for all acquisitions‚ and also because the future potential profits‚ growth opportunities and synergies from this acquisition is likely to be greater than the cost of this merger. Sources of synergy gains
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BMCF 5103 CORPORATE FINANCE Dr. Nguyen Thi Hoang Anh Lecture 1: An Introduction to Corporate Finance Contents What is finance? What is corporate finance? The balance-sheet model of the firm Capital budgeting Capitalstructure The firm and thefinancial markets Forms of business organisation The goals of a corporation Agency relationships: stockholders versusmanagers‚ stockholders versus creditors Managers’ actions to maximise stockholder wealth Financial management
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∑(Expected CFt)/(1+r)t – Investment * Perpetuity – pays a fixed amount C per period forever * P(C‚r) = C/r requires cash flow to begin NEXT period. If begin now‚ then PV = C + C/r * Annuity – fixed stream of cash flows that has a final period t * A(C‚r‚t) = C/r [1-1/(1+r)t] * Growing Perpetuity – G(C‚r‚g) = C/(r-g) C is initial cash flow‚ r is discount rate‚ g is growth rate * P/E = 1/(r-g) * High P-E multiple means the firm has good growth opportunities (high
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BUS 3303 Finance Course review Ale Previtero AGENDA 1. Overview of valuation cases 2. WACC • Cost of equity‚ choosing beta‚ choosing weights‚ when to use premium. 3. Valuation using Discounted Cash Flow (DCF) • Key assumptions‚ Terminal Value‚ sensitivity 4. Valuation using multiples • Key points‚ pros & cons‚ choosing comparable firms • Which multiple? Which year? Example. 5. Financing an Acquisition • Determine price. Financing. Making a decision. 6. Final exam
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Collinsville plant at the price of $12 million. The key to solving this case is the valuation of the Collinsville plant. For Signal‚ the purchase of Collinsville plant is like undertaking a new project. So this case can be translated into a capital budgeting problem. If the present value of this acquisition can be figured out‚ then the case is solved. The first step of working out the present value is to determine the cash flow of each period. Both in the case materials and in the exhibits‚ there are some
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