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Nairobi PLC (Valuation of Acquisitions & Mergers Example 2)

This topic has 5 replies, 3 voices, and was last updated 8 years ago by John Moffat.

Viewing 6 posts - 1 through 6 (of 6 total)

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May 2, 2016 at 2:24 pm #313348
Sarah
Member
- Topics: 3
- Replies: 17
When calculating the total cash flows do you have to reduce the synergistic benefits by the tax rate?
i.e. year 1 = 20+8+(10*0.7) =35?
When I calculated the cash flows I just added Nairobi plus Delhi plus benefits of 10 p.a. but my answers were 3m higher than the answers given?
Thanks
Sarah
May 2, 2016 at 2:37 pm #313353
John Moffat
Keymaster
- Topics: 57
- Replies: 54679
It is assumed that the synergy benefits are pre-tax (I should have really written this in the question).
May 2, 2016 at 3:43 pm #313359
Sarah
Member
- Topics: 3
- Replies: 17
ok thank you 🙂
May 3, 2016 at 7:51 am #313455
John Moffat
Keymaster
- Topics: 57
- Replies: 54679
You are welcome 🙂
February 17, 2017 at 6:28 pm #372924
Andrea
Member
- Topics: 0
- Replies: 6
Hi Sir.
Can you explain where the gain of 4 for the Nairobi investors comes from please?
Many thanks,
Andrea
February 18, 2017 at 7:27 am #372978
John Moffat
Keymaster
- Topics: 57
- Replies: 54679
Sorry – it is a typing error and I will have it corrected.
The gain should be 177 – 170 = 7 (not 4)
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