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F. Naz
F. Naz, Bachelor's Degree
Category: Business and Finance Homework
Satisfied Customers: 5252
Experience:  Have completed B.COM and CA Finalist
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WARREN BUFFETT HAS ASKED YOU TO EVALUATE TWO POSSIBLE

Customer Question

WARREN BUFFETT HAS ASKED YOU TO EVALUATE TWO POSSIBLE COMPANIES FOR ACQUISTION BY BERKSHIRE-HATHAWAY. RESPOND TO THE
FOLLOWING QUESTIONS:
1. Astro Zeneca
1. One possible acquisition is a privately held company in an established (mature) industry. Astro Zeneca a pharmaceutical company.
Relevant Financials are:
• Free cash flow for the past year was $2,000,000.
• The company has a WACC of 10%.
• Outstanding shares: 50,000
Assets:
• Liabilities and stockholders’ equity:
o Book value of Long term debt: $500,000
o Book value of the firm’s equity: $500,000
1. What is the value of the firm?
2. What is the market value of the firm’s equity?
3. What is the firm’s MVA?
4. What is the firm’s stock price?
B. Zehpher Intelligence
1. A second possible Acquisition, Zehpher Intelligence, an IT company is
operating in a rapid growth industry.
Relevant financials:
• Free cash flow for the past year was $10,000,000
• The company’s WACC is 20%
• Outstanding shares
Submitted: 1 year ago.
Category: Business and Finance Homework
Customer: replied 1 year ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  F. Naz replied 1 year ago.

Please mention your deadline, thanks.

Customer: replied 1 year ago.
1 hour. I have to submit by 1 hours time and have to score 100%. Can you help?
Expert:  F. Naz replied 1 year ago.

Okay will try

Customer: replied 1 year ago.
Can you start immediately?
Expert:  F. Naz replied 1 year ago.

INcomplete data for B and also check others area thanks.

Customer: replied 1 year ago.
I checked with my lecturer. Everything is there
Expert:  F. Naz replied 1 year ago.

For Zehpher the shares outstanding are not given and after this no other information or requirement is given, thanks.

Customer: replied 1 year ago.
WARREN BUFFETT HAS ASKED YOU TO EVALUATE TWO POSSIBLE COMPANIES FOR ACQUISTION BY BERKSHIRE-HATHAWAY. RESPOND TO THE
FOLLOWING QUESTIONS:1. Astro Zeneca1. One possible acquisition is a privately held company in an established (mature) industry. Astro Zeneca a pharmaceutical company.Relevant Financials are:
• Free cash flow for the past year was $2,000,000.
• The company has a WACC of 10%.
• Outstanding shares: 50,000Assets:
• Liabilities and stockholders’ equity:o Book value of Long term debt: $500,000
o Book value of the firm’s equity: $500,0001. What is the value of the firm?
2. What is the market value of the firm’s equity?
3. What is the firm’s MVA?
4. What is the firm’s stock price?B. Zehpher Intelligence1. A second possible Acquisition, Zehpher Intelligence, an IT company is
operating in a rapid growth industry.Relevant financials:
• Free cash flow for the past year was $10,000,000
• The company’s WACC is 20%
• Outstanding shares 150,000Assets:o Book value of long term debt: $2,000,000
o Book value of equity: $20,000,0001. What is the value of the firm?
2. What is the market value of the firm’s equity?
3. What is the firm’s MVA?
4. What is the company’s stock price
Customer: replied 1 year ago.
Check now
Customer: replied 1 year ago.
Time is really not on my side
Customer: replied 1 year ago.
I have 45 minutes now
Expert:  F. Naz replied 1 year ago.

{C}1. One possible acquisition is a privately held company in an established (mature) industry. Astro Zeneca a pharmaceutical company.

Relevant Financials are:
• Free cash flow for the past year was $2,000,000.
• The company has a WACC of 10%.
• Outstanding shares: 50,000

Assets:
• Liabilities and stockholders’ equity:

o Book value of Long term debt: $500,000
o Book value of the firm’s equity: $500,000

1. What is the value of the firm?

(###) ###-####.1 = $20000000

2. What is the market value of the firm’s equity?

20000000 – 500000 = $19500000
3. What is the firm’s MVA?

19500000-500000 = $19000000
4. What is the firm’s stock price?

19500000/50000 = $390

B. Zehpher Intelligence

1. A second possible Acquisition, Zehpher Intelligence, an IT company is
operating in a rapid growth industry.

Relevant financials:
• Free cash flow for the past year was $10,000,000
• The company’s WACC is 20%
• Outstanding shares 150,000

Assets:

o Book value of long term debt: $2,000,000
o Book value of equity: $20,000,000

1. What is the value of the firm?

10000000/.2 = $50000000
2. What is the market value of the firm’s equity?

50000000-2000000 = $48000000
3. What is the firm’s MVA?

48000000-20000000= $28000000
4. What is the company’s stock price

48000000/150000 = $320

Customer: replied 1 year ago.
Which company should be purchased?
Expert:  F. Naz replied 1 year ago.

Apparently it seems that the Zehpher should be purchased with lower stock price. But the company which is traded at lower than the above calculated market value for option one the stock price is $390 and for option 2 the stock price is $320, if the Astro is available for less than 390 it should be purchased and if Zehpher is available in the market for less than 320 it should be purchased.

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