--%>
Assignment Help - homework help

Explain the structure Debt/Shareholders’ Equity

Our company (A) is going to buy the other company (B). We need to value the shares of B and, thus, we will use three options of the structure Debt/Shareholders’ Equity in order to obtain the WACC as:

1) Present structure of A and B, and

2) Structure used by A to finance the acquisition of B’s shares.

We will value the company B through applying these three options and then take as a reference average of the results. Is it correct?

E

Expert

Verified

That average has no sense. The relevant structure is the same to the one in three, but none of the ones specified is correct. The correct valuation is difference among the values of (A+B) after acquisition minus the value of A today.

   Related Questions in Corporate Finance

  • Q : Strategy of Bull Spread State when

    State when market is expected to go up then what is the Strategy of Bull Spread?

    		•
  • Q : Who was the first to quantify the idea

    Who was the first to quantify the idea of Brownian motion?

    		•
  • Q : Illustrates cost of its equity is zero

    Is this true that the cost of its equity is zero, if a company does not distribute dividends?

    		•
  • Q : How could we project exchange rates How

    How could we project exchange rates within order to be capable to forecast exchange differences?

    		•
  • Q : Who described option pricing with

    Who described option pricing with deterministic volatility?

    		•
  • Q : Define Initial public offering or IPO

    Initial public offering: An initial public offering (IPO) otherwise called as stock market launch, is the first time company selling stock to public. Usually raised for capital expansion and to become publicly traded company. Investment banking firms

    		•
  • Q : What is Box Spread Box Spread: This is

    Box Spread: This is another strategy which seeks to exploit the arbitrage opportunities which are available in the market. In case that the options are correctly priced, this strategy would earn only the risk free rate. However, due to existence of im

    		•
  • Q : Analysis on Stock Prices Using the last

    Using the last 3 years of closing stock prices on the first trading day of each month from January,  2010 through December 2012 for Apple (APPL) and the S&P 500 (market) for the same date range 1)    &n

    		•
  • Q : Explain undervaluation of share on the

    Suppose we calculate g as ROE (1–p)/(1–ROE (1–p)) and the Ke by the CAPM. We replace both values into the formula PER = (ROE (1+g) – g)/ROE (Ke-g) but there PER we obtain is fully different from the one we get by dividing the quotation of the s

    		•
  • Q : Data races-critical sections-processor

    A) Research the phenomena of data races. Give an illustration of how an unprotected data race can give mount to data inconsistency.How do OpenMP and Cilk resolve this problem? B) Present your own fully documented and tested program

    		•