1. Is Mercury a good target for AGI? Discuss strategic fit of brands‚ products‚ customers‚ and distribution. Identify specific sources of value. Discuss AGI’s strengths/weaknesses compared with other bidders. Mercury AGI Brands Acquire an iconoclastic nonconformist image that trying to exploit by adding a line of active casual footwear. Associated with a lifestyle that was prosperous‚ active and fashion-conscious. products Main on men’s athletic footwear‚ and cover the athletic and casual footwear
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owned company specialized in the design‚ manufacturing and retailing of athletic footwear. The company is among the top five producers in the athletic shoe industry. It manufactures and sells its products internationally and operates factories in northern United States. Recent announcement of an Adidas-Reebok transaction would bring together two (2) of the most important rivals‚ therefore changing the global shape of the athletic shoe industry. This new deal forces New Balance’s executives to review
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Net Present Value of Mercury Athletic Enterprise The results of my financial analysis based on the Free Cash Flow Method considering the base case of financial projections and assumptions for Mercury Athletic Footwear collated and developed by John Liedtke indicate that that the project to acquire Mercury Althletic has a positive net present value at $243‚025 (in thousands) [ given by PV(FCF)=86‚681+ PV (Terminal Value) =156‚343] which is also greater than the recommended acquisition price of $186
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1. Why do think Larry Stone wants to estimate the firm’s hurdle rate? Is it justifiable to use the firm’s weighted average cost of capital as the divisional cost of capital? Please explain. (10% weighting) Answer The hurdle rate is the rate of return a firm has to offer finance providers to induce them to buy and hold financial security. (Arnold‚2007). This is also known as cost of capital or weighted average cost of capital. The returns offered by alternative securities with the same risk
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weighted average cost of capital (WACC) to be 8.3%. I find error in this calculation as a result of the following points of disagreement: a) Weighting of Capital Structure: Use of book values of capital rather than the market values b) Cost of Debt Calculation: Incorrect method for calculating debt c) Tax Rate: Use of a tax rate derived from the summation of state and statutory taxes instead of the firm’s marginal tax rate 2. Revised Calculation of WACC: WACC reflects the weighted average
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steps in an industry analysis are: * Identify the industry and describe its market. Footwear was a mature‚ highly competitive industry marked by low growth‚ but fairly stable margins. However‚ the individual firms could be quite volatile. * Classify the market structure of the industry. The market for athletic and casual shoes remained fragmented‚ despite the presence of a small number of global footwear brands. Since product lifecycles tended to be short‚ active management of inventory and
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California State University‚ Fullerton Department of Economics/MCBE Comparative Economic Systems (ECON 330) Spring‚ 2014 Course Syllabus Instructor: Nek Buzdar‚ Ph.D. Class Meetings: Section 01‚ Schedule # 11872 ( TuTh 11:30 AM -12:45 PM‚ SGMH 1303) Section 02‚ Schedule # 12161 (TuTh 2:30 PM - 3:45 PM‚ SGMH 2501) Section 03‚ Schedule # 12162 (TuTh 4:00 PM - 5:15 PM‚ SGMH 2205) Section 04‚ Schedule # 12320 (TuTh 10:00 AM - 11:15 AM‚ SGMH 1303) Office Location
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TANMAY GUPTA tg2311 American Chemical Corporation Cost of Capital : Collinsville Investment [pic] Where: Re = cost of equity Rd = cost of debt E = market value of the firm’s equity D = market value of the firm’s debt V = E + D Tc = corporate tax rate D/V and E/V Ratio: Since the target debt ratio of Dixon is given to be about 35%‚ we assume the target D/V ratio for Colinsville investment to be the same. Hence the E/V ratio
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Europe Athletic Apparel and Footwear Industry Outlook to 2018- Eastern European Region to Drive Future Growth provides a comprehensive analysis of the athletic apparel and footwear market in Europe. The report covers various aspects such as market size of athletic apparel and footwear‚ market segmentation on the basis of geography by Western and Eastern Europe‚ by demand from men‚ women and children and by types of athletic wear product categories including knitted and crochet‚ non-knitted and non-crotchet
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WACC Example: A firm is considering a new project which would be similar in terms of risk to its existing projects. The firm needs a discount rate for evaluation purposes. The firm has enough cash on hand to provide the necessary equity financing for the project. Also‚ the firm: - has 1‚000‚000 common shares outstanding - current price $11.25 per share - next year’s dividend expected to be $1 per share - firm estimates dividends will
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