Acme Manufacturing, Inc. is in negotiations to acquire Miley Manufacturing
Question # 00711471
Posted By:
Updated on: 09/01/2018 01:49 PM Due on: 09/01/2018
Case Study Objective: .5hr
Acme Manufacturing, Inc. is in negotiations to acquire Miley Manufacturing, Inc. It needs to estimate the value of Miley to begin the price negotiations.
Case Study Requirements:
Given the following assumptions, estimate the value of Miley Manufacturing, Inc. using a Discounted Cash Flow (DCF) analysis to assist in the price negotiations:
- Debt free cash flow - Year 1: $500K
- Debt free cash flow - Year 2: $750K
- Debt free cash flow - Year 3: $1,200
- Debt free cash flow - Year 4: $1,300
- Debt free cash flow - Year 5: $1,400
- Terminal value at end of Year 5: $13,200
- Discount rate equal to WACC rate – 15%
- Interest bearing debt at valuation date - $500K
A worksheet has been attached to allow you to work through this DCF analysis.
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Rating:
/5
Solution: Acme Manufacturing, Inc. is in negotiations to acquire Miley Manufacturing