It Is December 2022 You Work As A Financial Analyst For Merck Co And Are Tasked With The Due Diligence On The Propos 1 (58.49 KiB) Viewed 8 times
It Is December 2022 You Work As A Financial Analyst For Merck Co And Are Tasked With The Due Diligence On The Propos 2 (56.35 KiB) Viewed 8 times
It is December 2022. You work as a financial analyst for Merck & Co. and are tasked with the due diligence on the proposed acquisition of a biotech startup. You estimated the following cash flows for the startup: Year 2023 2024 2025 2026 2027 After 2027, cash flows are expected to grow by 4% per year. Based on the riskiness of your industry, you think that your weighted average cost of capital is 18%. Expected free cash flow ($ million) (end of year) 80.5 120.75 156.98 188.37 207.21 The biotech firm has 5 million shares and bonds worth $120 million outstanding. 0+ decimals Submit Part 1 Attempt 1/10 for 9.7 pts. What is the terminal value, i.e., the present value of all free cash flows from 2028 to infinity expressed in 2027-dollars (in $ million)?
Part 2 What is the total value of the company (in $ million)? 0+ decimals Submit Attempt 1/10 for 9.7 pts. 0+ decimals Part 3 What is the value per share of common stock (in $)? Submit Attempt 1/10 for 9.7 pts.
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