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

question 2

Multiple Choice

Use BSL's actual financial data for 2010 and its projections for 2011 to 2015 as shown above.Assume BSL 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.What is the maximum acquisition price (in $ millions) Macklemore should pay to acquire BSL's equity?

• A) $1,702.80
• B) $2,227.80
• C) $2,342.94
• D) $2,383.94
• E) $2,603.80

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Definitions:

Incest Taboo

A cultural and social prohibition against sexual relationships or marriage between close relatives or family members.

Incest

Marriage or sexual intercourse between people who are too closely related, usually parent and child and sibling relations at a minimum.

Rural Areas

Regions located outside towns and cities, often characterized by lower population density and agricultural or natural landscapes.

Bride-Price

A payment made by the groom or his family to the bride's family, common in some cultures as part of the marriage process.