Posted: April 4th, 2022
Firm Financial Analysis Project: Part VI
Your Firm Financial Analysis Project (Parts I-VI) is due Saturday by 11:59 pm CT
Using the principles and tools outlined in the textbook, complete a Capital Structure Analysis, Capital Budgeting Analysis and form Funding Growth Strategies for the Firm. You must also compile a bibliography and list of data/sources.
Part VI: Capital Budgeting Analysis, Capital Structure Analysis and Funding Growth Strategies, and Bibliography and Data (due Week 8)
Capital Budgeting Analysis (30 points): You have been asked to evaluate a potential acquisition of a smaller privately owned competitor. The acquisition candidate produces an EBITDA of 10% of your current EBITDA and is offered to your firm at a price of multiple of 8 times EBITDA. Assume the following:
Create an after-tax cash flow analysis to answer the following:
Capital Structure Analysis and Funding Growth Strategies (80 points): Imagine your firm has some attractive investment opportunities that it is considering. The capital budgeting process has been completed and found that these projects have a positive NPV and are desirable. The firm must raise financing for the projects in the amount equal to 5% of the current level of its total assets. As you know, these funds can come from a number of sources: operations, short-term debt, long-term debt (new bond issues), or equity (new stock issues).
Your task is to decide where funds for these projects should come from based on your knowledge of the firm and your knowledge of the current state of the economy (i.e., level of interest rates, state of the stock market, future prospects for the economy/firm). This section is worth 80 points. Your analysis should answer the following questions:
Bibliography and data compilation (20 points): to complete submission requirements, compile a detailed bibliography and index of the data and sources you’ve collected for the project.
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