PLEASE PROVIDE EXCEL SHEET WORK. Attach excel sheet work as well pls. You are an...
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PLEASE PROVIDE EXCEL SHEET WORK. Attach excel sheet work as well pls. You are an Acquisition Offer for an Investment Bank. Your Discount Rate is 5.8%.
The Company:
Gross Income:
Year 1: $610,261
Year 2: $644,746
Year 3: $676,561
Year 4: $694,712
Year 5: $713,206
Year 6: $716,050
You have estimated the cost of operations at the company to be 40%. Additionally, you believe that the ever-changing processing world requires constant upgrades to equipment. Therefore, you are projecting a new file server and workstations will need to be purchased in year two. The cost of the new system is $75.000. You believe a fair Growth Rate is 2%. Your WACC is 5.3%. The asking price is $5,100,000. Your firm requires all investment models to be based upon 5years.
Questions:
1. What is the Residual Rate? Hint: What is the formula for Residual Rate? 2. What is the Capitalization Rate? Hint: What is the formula for Capitalization Rate? 3. What is the IRR of the acquisition? 4. What is the NPV of the acquisition? 5. Do you recommend this acquisition? Explain.
PLEASE PROVIDE EXCEL SHEET WORK. Attach excel sheet work as well pls. You are an Acquisition Offer for an Investment Bank. Your Discount Rate is 5.8%.
The Company:
Gross Income:
Year 1: $610,261
Year 2: $644,746
Year 3: $676,561
Year 4: $694,712
Year 5: $713,206
Year 6: $716,050
You have estimated the cost of operations at the company to be 40%. Additionally, you believe that the ever-changing processing world requires constant upgrades to equipment. Therefore, you are projecting a new file server and workstations will need to be purchased in year two. The cost of the new system is $75.000. You believe a fair Growth Rate is 2%. Your WACC is 5.3%. The asking price is $5,100,000. Your firm requires all investment models to be based upon 5years.
Questions:
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