1. (45 points) Calculate the value of Carborundum (on an aggregate and per share basis) using both the Free Cash Flow to Capital (FCFcap) and Free Cash Flow to Equity (FCFeq) methods. Use the following assumptions: Note: Rf=5.6%; MRP=8.8%, Carborundum’s levered beta (prior to deal)=1.16 FCFeq=Net Income + Non Cash Deductions-Capital Expenditures-Change in Net Working Capital-Debt Repayment+ Debt Issuances + Miscellaneous Extras Answer: Value of Kennecott using FCFcap is: $53.8 Value of
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Goodwill Impairment – FASC Section 350 a. What is Step 1 in the two step process for evaluating goodwill? The first step of the goodwill evaluation process compares the fair value of a reporting unit with its carrying amount, including goodwill (350-20-35-4). b. What is Step 2 in the two step process for evaluating goodwill? The second step of the goodwill evaluation process compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill (350-20-35-9)
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of years necessary for free cash flow of the project to amortize the initial project outlay completely. A short payback period is desirable, which means the costs are recovered fast, and thus the project is considered less risky and more favorable. It is easy to apply and understand, and useful to compare with other investment plans. Third, the net present value (NPV) of free cash flow is positive. This criterion is calculated as the present value of future cash flows of the project less the initial
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Period Make the cash flow and cumulative cash flow. Payback period=A+BC A is the number of years when cumulative cash flow is still negative. B is the final negative figure and C is the figure that makes cumulative cash flow become positive. Drawbacks of payback period: 1. It makes no allowance for the time value of money, risk, financing or other important consideration, such as opportunity cost. 2. Receipts beyond the payback period are ignored (ignore cash flow after the payback
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is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. Answer the following questions in your report: 1. What is going on at Rosetta Stone? 2. Describe the economics of the Rosetta Stone business. Is this a business that you expect will generate interest among investors? What do you think the current market price is for Rosetta Stone shares? Justify your valuation on a discounted-cash-flow basis and a market multiples basis. • What are the
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FIN 370 Week 4 Calculating Cash Flow problem set Follow Below Link to Download Tutorial https://homeworklance.com/downloads/fin-370-week-4-calculating-cash-flow-problem-set/ For More Information Visit Our Website ( https://homeworklance.com/ ) Email us At: Support@homeworklance.com or lancehomework@gmail.com Data: Cost of Capital (borrowing) Cost of Automobile Cost of additional equiment atached to tu Tax rate Annual Before Tax Cash flows → Project 12.00% $200,000 $15,000
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lower down the margins. 1. 2. 3. 1. Projected Cash Flow is shown in appendix. The non-operating income is treated as zero so that EBIT equals to operating income. Also, an PPE schedule is calculated to verify that the CapEx given by Ex.6 is corresponded to the change of PPE and Depr. The account on Ex.7 is titled as Cash Used in Operation, since Mercury will perform as a division of AGI after acquisition, and there is no information on excess cash. However, the effect of
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CASE A CSX ACQUISITION OF CONSOLIDATED RAIL CORPORATION CSX has put up a bid of $8.3 B in order to horizontally integrate with Conrail in order to increase the combined profitability based on perceived improvement in Synergies. A) Lower Cost Structure: Railroad is capital intensive industry with very high fixed cost. CSX-Conrail merger will lower company’s cost-structure by creating increasing economies of scale. Operating ratio of Conrail is 87.63% and CSX’s operating ratio is 81.99% (Exhibit
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Estimated Exit Value of Equity at 2010 Using EBITDA Multiples | ($millions) | | | | | | | Median1 | Mean2 | DTF/URI3 | Cendant/URI4 | RAC-adjusted EBITDA, case Exhibit 8 | $853.4 | $853.4 | $853.4 | $853.4 | Car rental EBITDA multiple | 6.47 | 7.04 | 6.18 | 8.47 | RAC Operating Company Value | $5,521.5 | $6,007.9 | $5,274.0 | $7,228.3 | | | | | | Net book value of fleet, case Exhibit 9 | $9,455.0 | $9,455.0 | $9,455.0 | $9,455.0 | | | | | | Total RAC value | $14
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West Coast Fashions, Inc (WCF) was a large business, which dealt with men’s and women’s apparel. One of their segments was Mercury Athletic Footwear. WCF wanted to dispose off this segment. They just wanted to divest because they wanted to focus more on their core business and move it up to the elite class. John Liedtke was the Business Development Head at that time in Active Gear Inc. He had a clear idea that acquiring Mercury will shoot up AGI’s revenues for sure. It would also ensure an expansion
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