Chapter 16 The valuation of Acquisitions and Mergers --- example 2

Xxuanguo14y ago

I have a question for Chapter 16 example 2.

The discount total cash flows for 1 yr, 2yr, etc....5yrs are 34, 41, 46, 51, 206.

Can someone explain how to get those numbers from?

Jjoeackim14y ago#1

I think its total of the two companies cash flows plus the synergetic benefit of
10 p.a less the gain of 4 by Nairobi shareholders

For example in yr 1: Nairobi Cashflow 20 + Delhi CF 8 + Syng Benft 10 = total of 38 less gain of 4 = 34.
However there is need to clearly understand whats going on here. Somebody may clarify it better.

Xxuanguo14y ago#2

until the final calculation, we know there is the gain of 4 by Nairobi Shareholders, how can we put this into the middle of calculation?