fm15 9 - = $420 + $100 = $520 million Value Of Equity =...

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Mini Case: 15 - 9 e. 1. The first acquisition target is a privately held company in a mature industry. The company currently has free cash flow of $20 million. Its WACC is 10% and it is expected to grow at a constant rate of 5%. The company has marketable securities of $100 million. It is financed with $200 million of debt, $50 million of preferred stock, and $210 million of book equity. What is its value of operations? Answer: e. 2. What is its total corporate value? What is its value of equity? Answer: Total Corporate Value = VOP + MKT. SEC.
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Unformatted text preview: = $420 + $100 = $520 million Value Of Equity = Total - Debt - Pref. = $520 - $200 - $50 = $270 million e. 3. What is its MVA (MVA = total corporate value total book value)? Answer: MVA = total corporate value of firm minus total book value of firm total book value of firm = book value of equity + book value of debt + book value of preferred stock MVA = $520 - ($210 + $200 + $50) = $60 million ( ) ( ) 420 05 . 10 . ) 05 . 1 ( 20 V g WACC ) g 1 ( FCF V Op Op = + = + =...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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