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Synergy

Synergy

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Published by Ahsan

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Published by: Ahsan on Apr 15, 2011
Copyright:Attribution Non-commercial

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05/11/2011

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VALUING SYNERGY: WORKSHEET
50
SYNERGY VALUATION WORKSHEET
Enter the following information on the bidding firm
Current Financial Information
Revenues in current year =$1,000.00COGS as % of Revenues =70.00% Tax Rate on income =35.00%Interest Expenses =$100.00Current Depreciation =$50.00Current Capital Spending =$75.00Working Capital as % of Revenue =5.00%
Projections of growth in earnings
Expected growth rate - next 5 years =15.00%Expected growth rate - after 5 years =6.00%
Risk measures
Beta of the stock =1.10
Enter the following information on the target firm
Current Financial Information
Revenues in current year =$800.00COGS as % of Revenues =75.00% Tax Rate on income =35.00%Interest Expenses =$100.00Current Depreciation =$75.00
 
VALUING SYNERGY: WORKSHEET
51Current Capital Spending =$100.00Working Capital as % of Revenue =5.00%
Projections of growth in earnings
Expected growth rate - next 5 years =20.00%Expected growth rate - after 5 years =7.00%
Risk measures
Beta of the stock =1.25
General Information
Current riskfree rate =6.00%Risk premium over riskfree rate =5.50%
Information on Synergy benefits
What form does the synergy benefit take?3(1: Cost reduction ; 2:Cost reduction and Increase growth: 3: Only increase groI. The cost of goods sold without synergy is 72.22%If the synergy is going to reduce costs, enter the new cost of goods soldIIa. The growth rate in earnings in the next five years without synergy is16.26%If the synergy will increase growth, enter the new growth rate20.00%IIb. The growth rate after year 5 is expected to be6.30%If the synergy will increase this growth rate, enter the new growth rate7.00%
 
VALUING SYNERGY: WORKSHEET
52

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