Case study Example | Topics and Well Written Essays - 500 words - 4

Case Study ExampleHence the only getable option is $1250 thousand dollars.5. The formula to calculate terminal value using the perpetuity method is attached as FCFn X (1+g) / WACC g, where FCFn is the FCF for the last 12 months of the projection period, g is the perpetuity growth rate and WACC is the weight down average hail of capital. Using this formula,6. Total avocation expense from 1971 to 1976, based upon Exhibit 7 equals 3049 thousand. The existent Interest tax shield ( arouse expense X tax rate) in a given social class equals the minimum of the calculated Its and the projected taxes before the ITS is applied. ITS for each year is thus given as follows7. The modify Present Value method may be calculated as the sum of the FCFs discounted by the cost of the assets plus the interest tax shields which are discounted at the cost of debt. The present enterprise value of the stack for 1971The free cash flow available in 1971 is $726 thousand. The terminal value is $10,010. T herefore, the sum of PCF and TV is 10726. The interest tax shield available in 1971 is $99372 hence the present adjusted value of the enterprise is $10825372 or about $10 million.8. Since the investors are prepared to provide $4750 thousand at the rate of 9%, the interest payable amounts to $2,137,500. In order to ensure that the investors are motivated to offer the large amount of capital, the companionship needs to make sure that they are allowed purchase at least 6 million shares as