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

question 9

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 that in the years after 2015 the company's free cash flow grows 4 percent per year in perpetuity.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) $4,297.25
• B) $4,571.49
• C) $4,686.78
• D) $6,181.49
• E) $5,351.19

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Definitions:

Decrease

A reduction in size, amount, extent, or intensity.

Addition

A mathematical operation where two or more quantities are combined to make a sum.

Time-Out

A disciplinary technique used to remove an individual from an environment where unacceptable behavior has occurred, to encourage reflection and calm down.

Improve

To make or become better; to enhance the quality, value, or performance of something.