Pursuit co (jun 12)

There is no question called Pursuit in the June 2012 exam. Are you sure you have the date correct?

The value of the firm (equity plus debt) is the PV of the free cash flows discounted at the WACC, and is 40,095. From the question, the equity is 90% of the total firm value and so is 90% x 40,095 = 36,086. The question also says that the payment will be the equity value plus 25%, so the premium payable on the equity value is 25% x 36,086

hello Sir how did the increase in debt capacity figure $24584500 came from? already took 50 out of total combined value of the same question Pursuit co

The value of the combined company is 189,169,000. If they maintain the capital structure then the debt will have a market value of 1/2 x 189,169,000 = 94,584,500. Currently the debt has a market value of 70,000,000, so an extra 24,584,500.