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History homework question asked by my small bro

Tue Sep 04, 2012 11:26 am by student2012

Between Germany and japan who was the last to surrender during the second world war

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Need Help in writing a Research proposal

Sun Aug 19, 2012 6:31 am by The Students Forum(TSF)

How Do You Write a Research Proposal for Academic Writing
If you are in college then one of the many questions on your mind may be, how do you write a research proposal for academic writing. To write an academic research proposal is most likened to writing a proposal that addresses a project. The only difference is that the research proposal has either academic or scientific research at the …

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COrporate finance ,

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default COrporate finance ,

Post by yelmouh on Fri Jun 14, 2013 5:25 pm

Question 4
Sunfun Limited is considering the acquisition of  Verlan Limited. Both Sunfun and  Verlan are all equity financed. The Management of Sunfun has estimated that if it takes over Verlan it can increase the pre tax cashflows of  Verlan by  $1m every year.  The current market value of  Sunfun is $65 million. It has 13 million shares outstanding. The current market value of Verlan is $30 million and it has 3 million shares outstanding. Verlan has an equity beta of 0.6. The return on the market portfolio is 12%; the return on t-bills is 4%.   Verlan pays tax at the rate of 25% on its profits.  If  the transaction completes, Sunfun will incur acquisition costs of  $0.5m.   Using theory as appropriate,
(i)  What is the maximum price that Sunfun can pay as cash for a share of  Verlan?         
(ii) Is an  exchange of 2.0 shares of  Sunfun per share of  Verlan, fair  to Sunfun shareholders?
(iii)  Critically evaluate all assumptions made  in the calculations.

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