Use BSL's Actual Financial Data for 2010 and Its Projections

question 12

Multiple Choice

Use BSL's actual financial data for 2010 and its projections for 2011 to 2015 as shown above.Estimate BSL's value (in $ millions) at the end of 2010 assuming it is worth the book value of its assets at the end of 2015.The WACC of the acquiring firm (Macklemore) is 8.0 percent,BSL's WACC is 11.5 percent,and the average of the two companies' WACCs,weighted by sales,is 8.2 percent.

• A) $628.24
• B) $3,669.01
• C) $4,297.80
• D) $4,412.94
• E) $4,984.28

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Definitions:

Risk Of Obsolescence

The risk that a product or service will become outdated or no longer useful due to advancements in technology or changes in market preferences.

Income Tax

A tax imposed by the government on the income generated by individuals or entities, which varies according to the amount of income.

Land Improvements

Enhancements made to a plot of land, such as landscaping, fencing, or sidewalk construction, which increase the land's value and usefulness but may depreciate over time.

Useful Life

The estimated period that an asset is expected to be usable for the purpose it was acquired, important for calculating depreciation.