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Presentation/PPT
27/08/2022
Please help with the last two questions, not sure where to start?
Bailey Luxury RV, Inc., a publicly traded firm , is considering the acquisition of Little AngelClothing Company ( LACE ; for a price of $ 18 per share . LACE is a private company thatSpecializes in manufacturing clothing , shoes and accessories for beauty pageant contestants*The RV’ business is slow , and Bailey LUXURY’s CFO believes that the acquisition of LACE will*help to improve overall profitability and provide much needed cash flow . Bailey’s has 500, 000Shares of common stock outstanding , currently trading at 59.75 per share . The book value ofthe common stock is $5 per share . Bailey also has bonds with a market value of $3.500,000and a yield to maturity of 3. 4%/} . Based on current market valuations , Bailey is currentlyachieving its target debt to equity ratio . Bailey’s Equity beta is O. B.O ._ACC is a private firm that was founded ten years ago by four sisters , who have a combined100 years of experience in the beauty pageant business as competitors , judges , and coaches .LACE’S cost of goods sold | COGS ) is expected to be 38%’ of sales revenues , and selling ,general and administrative ( SGEA ) expenses are expected to be 12%’ of revenues . Theseestimates are in line with the firm ‘s historical performance , which is expected to continue for theforeseeable future . The firm is 100%6 Equity financed and has 100,000 shares of common stockoutstanding . It’s Equity beta is estimated to be 1 .353 .LACE has experienced rapid growth over the last ten years . However , your analysis of industrystructure suggests that competition in the beauty pageant clothing and accessories market islikely to increase in the next few years . Thus , you forecast that the perpetual growth rate forfree cash flows after five years will be a modest 1. 5%/ } per year .”Your team has been hired as consultants to Bailey Luxury RY to Evaluate the proposedacquisition of LACE . Tables 1 and 2 below contain additional data that you have collectedduring your research . The corporate tax rate is 40% for all firms .Table 1Forecast Data for Little Angel Clothing Company*Year !Year ?Year ?Year &Year 5Sales Revenue2010, 0003.35, 000$75,0004 10, 000575 , 000Investment in CapE * and MIC18.00025, 00040,00050,00065, 000Depreciation “15,00030,00040, 00052.010060, 000” The depreciation numbers listed above are not included in LOGE percentage Estimates .Table 2Market DataCurrent yield to maturity’ on 30 year treasury bonds2.50%’Estimate of Expected average return on the SEP 500 over the next 30 years7.50%’
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The writer is very fast, professional and responded to the review request fast also. Thank you.
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