Alpha Geek

(8)

$10/per page/Negotiable

About Alpha Geek

Levels Tought:
University

Expertise:
Accounting,Algebra See all
Accounting,Algebra,Architecture and Design,Art & Design,Biology,Business & Finance,Calculus,Chemistry,Communications,Computer Science,Environmental science,Essay writing,Programming,Social Science,Statistics Hide all
Teaching Since: Apr 2017
Last Sign in: 438 Weeks Ago, 2 Days Ago
Questions Answered: 9562
Tutorials Posted: 9559

Education

  • bachelor in business administration
    Polytechnic State University Sanluis
    Jan-2006 - Nov-2010

  • CPA
    Polytechnic State University
    Jan-2012 - Nov-2016

Experience

  • Professor
    Harvard Square Academy (HS2)
    Mar-2012 - Present

Category > Accounting Posted 14 May 2017 My Price 5.00

An all-equity financed company has a cost of capital of 10

11.   An all-equity financed company has a cost of capital of 10 percent. It owns one asset: a mine capable of generating $100 million in free cash flow every year for five years, at which time it will be abandoned. A buyout firm proposes to purchase the company for $400 million financed with $350 million in debt to be repaid in five, equal, end-of- year payments and carrying an interest rate of 6 percent.

a.    Calculate the annual debt-service payments required on the debt.

b.    Ignoring taxes, estimate the rate of return to the buyout firm on the acquisition after debt-service.

c.    Assuming the company’s cost of capital is 10 percent, does the buy- out look attractive? Why or why not?

 

Answers

Alpha Geek
(8)
Status NEW Posted 14 May 2017 05:05 PM My Price 5.00

-----------

Attachments

file 1494782340-Answer.docx preview (202 words )
1-----------1. ----------- A-----------n a-----------ll------------equ-----------ity----------- fi-----------nan-----------ced----------- co-----------mpa-----------ny -----------has----------- a -----------cos-----------t o-----------f c-----------api-----------tal----------- of----------- 10----------- pe-----------rce-----------nt.----------- It----------- ow-----------ns -----------one----------- as-----------set-----------: a----------- mi-----------ne -----------cap-----------abl-----------e o-----------f g-----------ene-----------rat-----------ing----------- $1-----------00 -----------mil-----------lio-----------n i-----------n f-----------ree----------- ca-----------sh -----------flo-----------w e-----------ver-----------y y-----------ear----------- fo-----------r f-----------ive----------- ye-----------ars-----------, a-----------t w-----------hic-----------h t-----------ime----------- it----------- wi-----------ll -----------be -----------aba-----------ndo-----------ned-----------. A----------- bu-----------you-----------t f-----------irm----------- pr-----------opo-----------ses----------- to----------- pu-----------rch-----------ase----------- th-----------e c-----------omp-----------any----------- fo-----------r $-----------400----------- mi-----------lli-----------on -----------fin-----------anc-----------ed -----------wit-----------h $-----------350----------- mi-----------lli-----------on -----------in -----------deb-----------t t-----------o b-----------e r-----------epa-----------id -----------in -----------fiv-----------e, -----------equ-----------al,----------- en-----------d-o-----------f- -----------yea-----------r p-----------aym-----------ent-----------s a-----------nd -----------car-----------ryi-----------ng -----------an -----------int-----------ere-----------st -----------rat-----------e o-----------f 6----------- pe-----------rce-----------nt.----------- a-----------. ----------- C-----------alc-----------ula-----------te -----------the-----------
Not Rated(0)
Relevent Questions