RSM333H1 Study Guide - Quiz Guide: Spread Betting, Cash Flow, Net Present Value
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You may work in groups of up to 3. Cookie monster inc. (a billion snack food company) is considering acquiring keebler elves but is unsure of how much is should be willing to pay for the target firm. 44 million shares are trading in the market for . 54 but cookie monster"s managers are convinced that its managers could tease out more value from their operations. Specifically, they expect to be able to decrease corporate overhead and thus increase the growth rate of keebler"s dividends by 1% per year. In order to capture these gains, cookie monster will also have to incur. million worth of after-tax restructuring costs at the end of the first year and another million (after-tax) at the end of year 2. Keebler"s dividend this year was . 80 and the appropriate discount rate is 13%: assuming they can purchase the company for its current share price, how much would the.
