finish spreedsheet – savvyessaywriters.net | Savvy Essay Writers
finish spreedsheet – savvyessaywriters.net | Savvy Essay Writers
Savvy Essay Writers Business & Finance Assignment Help
why these firms should merge, at what price (or stock exchange ratio) should they proceed, and at what price (stock exchange ratio) should they walk away?Be sure to use the case and the supplementary data contained in Appendix TN1 (file uploaded to BB) to complete the valuation of the two firms and their merged value(s). A student Excel spreadsheet is provided for your convenience. Use the Technical Note in Exhibit TN1 to inform our classroom discussion of the completed case analysis.1. How do you see FVC’s situation? What are the strengths and weaknesses of FVC and RSE? Why should these two firms want to negotiate a merger?2. What is FVC worth? (In order to find this answer, you need to value RSE by itself, FVC by itself, and then estimate the value of the incremental cash flows that result from the merger, i.e. the new value created by the merger). What are the key value drivers? Focus on the DCF approach, with Terminal Values estimated using the constant-growth valuation model and a perpetual-growth-rate assumption equal to a proxy value for the expected long-term nominal growth rate. You should test the sensitivity of the estimated merger value to variations in assumptions and to different scenarios about the future.3. What opening price do you think Mr. Flinder should offer to sell the company to RSE? At what price should he walk away from the negotiation? Qualitatively, how did you estimate those values?4. Do you recommend that RSE pays in cash or stock? Why? If stock, what exchange ratio do you recommend?