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# fm15 9 - = \$420 \$100 = \$520 million Value Of Equity = Total...

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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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