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hello sir,
in the working of proposal 3(management buy out)how is the amount 80 in Equipment needed to increase sales by 7% derived
and the amount of 200 for depriciation derived?Although it is listed in the ‘corporate restructuring’ paragraph of the question, it says there that $80M would be needed to increase sales by 7%. It is assumed that the same will apply to a MBO (except it will be pro-rata).
The depreciation is not 200M. The NCA’s are currently 120M. If you had the 80M (above) it gives 200M. The depreciation is 15% (but only on a proportion of the 200 because they will be closing down one part).
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