we can consider the interest tax shields as a perpetuity. annual interest tax shield=750000*6.8%*40%=$20‚400 In this case‚ we assume the risk of the interest tax shield equals the risk of the debt. rTS=rD=6.8% PVTax Shield=204006.8%=$300‚000 APV=1228485+300000=$1‚528‚485 3. We has known that rU=15.8%‚ rD=6.8%‚DV=25%‚EV=75%‚ through the formula rU=rDDV+rEEV ‚ we can get: rE=18.8% WACC=rDDV1-Tc+rEEV=6.8%*25%*1-40%+18.8%*75%=15.12% The terminal value of project at the end of 2006: TV2006=FCF2007WACC-g=FCF2006*1
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Stargate Institute Executive Summary Nabisco is a company that has been in existence since 1898. During their 109 years in existence‚ they have grown through natural growth‚ mergers‚ and acquisitions. This has allowed Nabisco to be the leading snack maker in the world. The Oreo chocolate sandwich cookie was first introduced in Hoboken‚ N.J. in 1911. Oreos today are far and away the world’s most popular cookie. The Oreo family accounts for approximately 10 percent of all store cookie sales--a
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1) Why is Flagstar in financial distress? When possible‚ back your claims with data. Signs of financial distress • The company lost money almost every year since its leveraged buyout by Coniston Partners in 1989. The income generated was not sufficient to service the interest expenses of the company which stood at $2.62B in 1996. From Exhibit 1‚ we can say that interest coverage ratio computed as EBIT / Interest Expense was 1.31 in 1989 and has been decreasing over years and currently stands at
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General Electric | Westinghouse | Hewlett Packard | Texas Instrument | IBM | Burroughs | Johnson & Johnson | Bristol-Myers Squibb | Marriott | Howard Johnson | Merck | Pfizer | Motorola | Zenith | Nordstrom | Melville | Philip Morris | RJR Nabisco | Procter & Gamble | Colgate | Sony | Kenwood | Wal- Mart | Ames | Walt Disney | Columbia | Almost all of the visionary companies were in financial crisis from the start. But later they have returned more than financial by attaching themselves
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Abstract In this report the objective is to evaluate the feasibility of Frito-Lay‚ Inc. launching a new product‚ Sun Chips™ Multigrain Snacks. Dr. Dwight R. Riskey‚ Vice President of Marketing Research and New Business at Frito-Lay‚ Inc. had to decide and present‚ together with the product management‚ the future for Sun Chips™ Multigrain Snacks. The chip had been in test-market for 10 months in the Minneapolis-St. Paul‚ Minnesota‚ metropolitan area and appeared to be extremely favorable according
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Question 1: Is Congoleum a good LBO candidate? In other words‚ does this company have a lot of debt capacity? To judge if a company is a good LBO candidate the following are very important factors: low levels of debt in the target‚ stable cash flows‚ excess cash on-hand‚ assets that can be used as collateral to raise debt and no major capital requirements to keep the business running on an on-going basis. Congoleum is an ideal LBO candidate because: 1. Low level of debt – estimated long term debt
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African Americans in a negative light Commercials from companies like Nabisco and Goodyear were highly offensive. For example‚ the Nabisco Company had a group of African Americans who were dressed like stereotypical natives‚ with war paint on their faces and bones in their noses. They were dancing around white hostages tied to stakes. The natives were supposed to be cannibals who will devour the white hostages if they were not given Nabisco snacks. A Goodyear commercial was even worse. A white
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1. There are two identical firms EQT Corp and DBT Corp except for their capital structure. For example none of the firms pay taxes‚ and EBIT is $22‚000 per year for both firms. There is no growth for any of the firms. EQT is an all equity firm with 1‚000 shares outstanding and expected return of 22%. Since there is no growth‚ EQT will pay out all earnings to shareholders as dividends. In contrast‚ DBT has $40‚000 worth of debt outstanding with interest rate of 5%. There are 500 shares of equity
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when we choose these three projects we do not want it went well in the first year but for the future benefits. After a whole year running‚ in 2010 the net income was 12.58 million and it was less than 2009. The revenue became 252.42 million and the APV we got this year was 319.38. This is not a problem now because the future view form the financial analysis and project details were going very
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Valuation of AirThread Connections Group 7 (Shaojin Ding/ Jin Wang/ Wenqi Gu/ Shijia Wu/ Tongtong Yin/ Canran Xie) Given the background of ACC and AirThread‚ do you think the acquisition is a good idea? Briefly explain your answer. Yes. First‚ American Cable Communication (ACC) and AirThread could help each other compete in the industry that was moving more and more bundled service offerings. Second‚ the acquisition could help both companies expand into the business market. Third‚
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