Please fill in the numbers that are not given in the chart. You are leading a te

Question

Please fill in the numbers that are not given in the chart.

You are leading a team on a M&A; deal. Suddenly your analyst has disappeared and you have the following unfinished spreadsheet. The acquirer and the target are assumed to have zero growth. Now it is up to you to finish this job. AcquirerTargetCombined 400 100 500 Operating 200 60 260 Annual cost 20 savings EBIT EBIT(1 -t) Depreciation Gross Plant & ?1? 200 120 40 30 40 24 30 30 Equipment Change in 10 Working Capital Free Cash Flow 120 19 72? to Firm Discount rate Firm Value Long term debt Equity value 8.00% 9% 8% 73? 450 ?4? 1500 211.11 400 1100 161.111

Explanation / Answer

Acquirer Target Combined sales 400.00 100.00 500.00 Operating expenses 200.00 60.00 260.00 Annual cost savings 20.00 EBIT 200.00 40.00 260.00 EBIT*(1-t) 120.00 24.00 156.00 Depreciation 40.00 30.00 70.00 Gross plant and equipment 30.00 30.00 60.00 Change in working capital 10.00 5.00 15.00 Free cash flow to firm 120.00 19.00 151.00 Discount rate 0.08 0.09 0.08 Firm value 1500.00 211.11 1887.50 Long term debt 400.00 50.00 450.00 Equity value 1100.00 161.11 1437.50

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