× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
a
5
k
5
c
5
B
5
l
5
C
4
s
4
a
4
t
4
i
4
r
4
r
4
Home Q & A Board Other Fields Homework Help Business Finance
New Topic  
johnpaech johnpaech
wrote...
Posts: 1098
Rep: 7 0
6 years ago
Given that Rose issues new debt of $50 million initially to fund the acquisition, the total value of this acquisition using the APV method is closest to:
A) $100 million
B) $120 million
C) $124 million
D) $115 million
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 88 times
2 Replies

Related Topics

Replies
wrote...
#1
6 years ago
C
Explanation:  C) runlevered =   rE +   rD (1 - τc), where D = net debt = Debt - Cash
runlevered =   (.10) +   (.06) = .08
VU =   = $100 million
Interest tax shield in first year = $50(.06)(.40) = $1.2 million
PV(tax shield) =   = $24 million
VL = VU + PV(interest tax shield) = $100 million + $24 million = $124 million
johnpaech Author
wrote...
#2
5 years ago
This course drove me insane!
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  929 People Browsing
 107 Signed Up Today
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 293
  
 905
  
 237
Your Opinion
Do you believe in global warming?
Votes: 370
Previous poll results: Which of the following is the best resource to supplement your studies: