fin630_db3

Apr 28th, 2015
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Acme is also considering the acquisition of a firm in the Czech Republic and would like your opinion on this. It plans to operate the firm for 3 years and then reevaluate the holding. Free Cash flows are estimated as follows: • Year 1 - 38.63M Czech Koruna (CZK), Year 2 - 44.33 M CZK, • Year 3 - 50.48M CZK • The third year terminal value is estimated at 375M CZK. The Czech Koruna's exchange rate is assumed to be .038 USD/CZK for each year. Acme uses a WACC of 13 % for its domestic projects. So, the PV of the FCF's for the firm is 363.78 M CZK or $13.82M. The Czech firm has 1,000,000 shares outstanding and a debt to equity ratio of 1:1. Current market price is 185 CZK per share. All monetary information (except per share) should be presented in CZK millions (i.e., do not convert to USD). 1. Should Acme make a deal if its policy is to never exceed a 20% premium in any tender offer? To defend your position, you must prepare and present an Excel template that includes the calculated fair val

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