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A comprehensive examination of the financial agreements, market values, and weighted average cost of capital (WACC) for Yellow Zymogen and ABCAll Belgian. The report highlights an €80,000 agreement, EPS data, cash dividends, and earnings metrics. Key financial indicators, such as net income, EBIT, and market value per share, are analyzed to determine the impact of various financing strategies on corporate value. Based on the current calculations, an NPV of -€20,000 and a post-announcement share price of €2.50 have been derived, emphasizing the need for strategic financial planning.
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ABYZ (B) XYZXenogenic Yellow Zymogen Agreement signed €80,000 ABCAll Belgian Cy Price/share € 12.50 Cash € 50,000 # shares 10,000 EPS 0.90 Beta 1.40 Cash paid out as dividend Earnings 8,500 Beta 0.70 Corporate tax rate = 40% ABYZAll Belgian Yellow Zymogen Riskfree rate: 5% Exp.return on mkt portfolio: 10%
ABC EBIT 9,000 Net income 5,400 WACC (= 5+5*1.4) 12% Mkt Value (5,400/0.12) 45,000 /# shares 10,000 Price per share 4.50 XYZ EBIT 8,500 Net income 5,100 WACC (=5+5*0.7) 8.50% Mkt Value 5,100/0.135 60,000 Valuing the companies NPV = 60,000 - 80,000 = - 20,000 NPV/share = -2€ Price per share after announcement = € 2.50
