Based on the estimated future incremental cash flows, what is the highest price (total amount, not...

Based on the estimated future incremental cash flows, what is the highest price (total amount, not per share) JHC should offer Mobile for a cash acquisition? Assume a cost of capital of 13%. how would I find the answer to this? what would the excel formulas be?

if the incremental values are

19200000 for year 1

18900000 for year 2

19900000 for year 3

22350000 for year 4

26900000 for year 5

28000000 for years 6-30

Expert Solution

Lest discount all the CF using excel:

Year	CF	Discount factor			Discounted CF
1	19200000	1/1.13^1	=	0.884955752	0.884955752212389*19200000	=	16991150
2	18900000	1/1.13^2	=	0.783146683	0.783146683373796*18900000	=	14801472
3	19900000	1/1.13^3	=	0.693050162	0.693050162277696*19900000	=	13791698
4	22350000	1/1.13^4	=	0.613318728	0.613318727679377*22350000	=	13707674
5	26900000	1/1.13^5	=	0.542759936	0.542759935999449*26900000	=	14600242
6	28000000	1/1.13^6	=	0.480318527	0.48031852743314*28000000	=	13448919
7	28000000	1/1.13^7	=	0.425060644	0.425060643746142*28000000	=	11901698
8	28000000	1/1.13^8	=	0.376159862	0.37615986172225*28000000	=	10532476
9	28000000	1/1.13^9	=	0.332884833	0.332884833382522*28000000	=	9320775.3
10	28000000	1/1.13^10	=	0.294588348	0.294588348126125*28000000	=	8248473.7
11	28000000	1/1.13^11	=	0.260697653	0.260697653208961*28000000	=	7299534.3
12	28000000	1/1.13^12	=	0.230705888	0.23070588779554*28000000	=	6459764.9
13	28000000	1/1.13^13	=	0.204164502	0.20416450247393*28000000	=	5716606.1
14	28000000	1/1.13^14	=	0.180676551	0.180676550861885*28000000	=	5058943.4
15	28000000	1/1.13^15	=	0.159890753	0.159890752975119*28000000	=	4476941.1
16	28000000	1/1.13^16	=	0.141496242	0.141496241570902*28000000	=	3961894.8
17	28000000	1/1.13^17	=	0.125217913	0.125217912894603*28000000	=	3506101.6
18	28000000	1/1.13^18	=	0.110812312	0.110812312296109*28000000	=	3102744.7
19	28000000	1/1.13^19	=	0.098063993	0.0980639931823976*28000000	=	2745791.8
20	28000000	1/1.13^20	=	0.086782295	0.0867822948516793*28000000	=	2429904.3
21	28000000	1/1.13^21	=	0.076798491	0.0767984910191852*28000000	=	2150357.7
22	28000000	1/1.13^22	=	0.067963266	0.0679632663886595*28000000	=	1902971.5
23	28000000	1/1.13^23	=	0.060144484	0.0601444835297872*28000000	=	1684045.5
24	28000000	1/1.13^24	=	0.053225207	0.0532252066635285*28000000	=	1490305.8
25	28000000	1/1.13^25	=	0.047101953	0.0471019527995827*28000000	=	1318854.7
26	28000000	1/1.13^26	=	0.041683144	0.0416831440704272*28000000	=	1167128
27	28000000	1/1.13^27	=	0.036887738	0.0368877381154223*28000000	=	1032856.7
28	28000000	1/1.13^28	=	0.032644016	0.0326440160313472*28000000	=	914032.45
29	28000000	1/1.13^29	=	0.02888851	0.0288885097622541*28000000	=	808878.27
30	28000000	1/1.13^30	=	0.025565053	0.0255650528869506*28000000	=	715821.48
					NPV= sum of discountec CF	=	168296907

So the maximum amount that can be paid is 168296907

jeff jeffy answered 1 year ago

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