We used the debt and equity values computed in lecture note 4 : In the proposed structure of BT, the debt was ?4 bn and the equity ?8 bn. This corresponds to debt of 33.3% debt and 66.7% equity. WACC = (E/V * ke) + (D/V * kd * (1 – tc)) Given these figures, the WACC was calculated to be 13%. Free cash flow calculations Exhibit 6 supplies the forecast for the next 5 years...
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We are starting from 1985 (as we are currently at 1984). In order to calculate the FCF of each year: • NOPLAT = Pretax profit – tax + Changes in differed taxes • Differed taxes = tax – tax payable • We assumed CAPEX is equal to the additional to fixed assets • Based on Exhibit 6 we assume that the change in WCR is 0 • FCF = NOPLAT + Depreciation – CAPEX – increase WCR We forecasted 1989 in order to extend our short term horizon to 5 years...
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Mmi In realty, it is uncertain and controversial.	1 / 255
M&Amp;A The reason for this relates to the notion of synergy: a merger or acquisition will benefit shareholder value when a company's post-merger share price increases by the value of potential synergy...	2 / 517
corporate finance And being more financially secure, profitable firms will find its extra debt increasing the risk of bankruptcy only slightly. In addition, rational investors view debt as a sign of equity...	3 / 756
Role of a Financial Manager The manager, as a stockholder's agent, is instructed to find and invest in all positive NPV projects open to the firm. There can be other goals for the financial manager other than maximizing profit at net present value...	4 / 843