Acme is considering the acquisition of a firm in the Czich Republic
and would like your opion 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- 44.33M 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 firm is 363.78M 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 value
permium over market.
2. What changes in the analysis or additional analysis do you suggest
before a final decision should be made?
3. Using the DCF metholdology required in question 1. please take one
of your suggestions and reevaluate the buy-out. To complete this
question, you will have to present a second Excel template that
includes your new assumed values and supports your recommendations.
Further, please comply with the following:
Assumptions must be reasonable - i.e. don't select arbitrary values.
Some discussion should be provided that explains how your arrived at
your new assumed values.
Variable changes should be restricted to the discount rate, the FCTs,
and /or the terminal value. Please present only one set of assumptions
(e.g. do not submit a table that includes multiple values for the same
variables.)
To help ensure that your values are unique, please use a minimum of
three significant (i.e. non-zero) digits to the right of the decimal
point.
Please present this problem in an excel spreadsheet with the analysis
and suggestions within the spreadsheet. Thank you in advance for any
help you can give me. All my efforts have failed |
Clarification of Question by
wingsattached-ga
on
17 May 2005 14:28 PDT
Acme is considering the acquisition of a firm in the Czich Republic
and would like your opion 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- 44.33M 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 363.78M 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 value
permium over market.
2. What changes in the analysis or additional analysis do you suggest
before a final decision should be made?
3. Using the DCF metholdology required in question 1. please take one
of your suggestions and reevaluate the buy-out. To complete this
question, you will have to present a second Excel template that
includes your new assumed values and supports your recommendations.
Further, please comply with the following:
Assumptions must be reasonable - i.e. don't select arbitrary values.
Some discussion should be provided that explains how your arrived at
your new assumed values.
Variable changes should be restricted to the discount rate, the FCFs,
and /or the terminal value. Please present only one set of assumptions
(e.g. do not submit a table that includes multiple values for the same
variables.)
To help ensure that your values are unique, please use a minimum of
three significant (i.e. non-zero) digits to the right of the decimal
point.
Please present this problem in an excel spreadsheet with the analysis
and suggestions within the spreadsheet. Thank you in advance for any
help you can give me. All my efforts have failed
|
