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:

Compounded Monthly

The process of adding interest to the principal balance of a loan or deposit on a monthly basis, resulting in interest on interest.

Compounded Quarterly

Compound interest that is calculated and added to the principal balance of an investment or loan on a quarterly basis, effectively increasing the amount of interest earned or paid each quarter.

Interest Rate

Interest Rate is the charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Compounded Semi-Annually

Compounded semi-annually refers to the process where interest on an investment or loan is calculated and added to the principal balance twice a year.