Answer Happy

SuperSwim SA is a producer of premium swimsuits based in France. It is a profitable business with a loyal clientele. Its price point is above its direct competitors, so it is its mark-up. For every 100 euros of sales, the company can develop the following performance data: Mark-up on sales 45% Other general and administrative costs on sales 15% With a total turnover of 47,000,000 euros in 2021, the company fared well during the pandemic, notwithstanding a significant drop in tourism. For a quick valuation of its outstanding equity, its earnings after cost of goods sold and general and administrative costs are a good approximation for its future performance. This aproximation can be stably projected at a fixed growth rate of 3% for an indefinite number of years. As a result, the company currently has a total pure equity value of euro 155,175,081 at the Paris stock exchange. MarketHawks Inc. is merger and acquisition firm based in the US. The firm targets profitable middle-sized businesses in Europe and buys them completely when the management feels it has identified a good candidate for acquisition. MarketHawks has identified Superswim as a valuable target and intends to purchase all of its existing shares Superswim is listed at the Paris stock exchange. Over the last 60 months, its shares have shown correlation with the French market index (CAC40) in a relatively excessive volatile manner, scoring a Covariance with the market index equal to 0.07. The CACAO normally has a volatility measured as standard deviation of returns equals to 22%, and an average yearly return of 9% SuperSwim has little debt. Run in a conservative way, the company currently has 5,000 zero-coupon bonds outstanding for a nominal value of euro 1,000 each, to be repaid in two years from now, and currently traded in the secondary market at euros 923. They represent a more yielding Investment compared to AAA rated public bonds issued by the French Republic, that repay 100 euros in three years from now and currently trade at 94 euros in the secondary market Charlotte Dupuis is a junior associate at MarketHawks. As a French graduate from ESSEC, she has been assigned the task to run the numbers on the acquisition of SuperSwim. She needs to find the appropriate discount rate for the acquisition of Superswim, given its current capital structure She has looked at the numbers given above and she thinks that a good discount rate for Superswim's asset cash flows would be exactly 10% Is Charlotte right or wrong? Please, find the exact value of the appropriate discount rate for SuperSwim's asset cash flows, Elven its capital structure.