- +44 141 628 6080
- info@tutorsglobe.com

What is its horizon value

Problem:

The second acquisition target is a privately held company in a growing industry. The target has recently borrrowed $40 million to finance its expansion; it has no other debt or preferred stock. It pays no dividends and currently has no marketable securities. KFS expects the company to produce free cash flows of -$5 million in 1 year, $10 million in two years, and $20 million in 3 years. After three years, free cash flow will grow at a rate of 6%. Its WACC is 10% and it currently has 10 million shares of stock.

(1) What is its horizon value (that is, its value of operations at Year 3)? What is its current value of operations (that is, at time zero)?

(2) What is its value of equity on a price per share basis?

Now Priced at $20 (50% Discount)

Recommended **(94%)**

1934166

Questions

Asked

3,689

Active Tutors

1457200

Questions

Answered

**
Start Excelling in your courses, Ask a tutor for help and get answers for your problems !! **

©TutorsGlobe All rights reserved 2022-2023.

## Q : Does the dutch auction ipo represent an improvement

Does the Dutch auction IPO represent an improvement over the traditional IPO? Explain your point of view using examples.