Purchase Solution

Determine the minimum price that you should ask for the sale of 51 percent of the shares of Omni Services...

Not what you're looking for?

Ask Custom Question

The fundamental problem at hand for you is to determine the minimum price that you should ask for the sale of 51 percent of the shares of Omni Services. Given the intense time pressure you are under, you have hired a group of unbranded local MBAs to crank up some figures. As part of a project for a corporate finance course, they came back to you with a simplified spreadsheet model to put a value on the company's shares.

** The spreadsheet is attached. **

The following information was also presented in the note accompanying the document and apparently served as the basis for their analysis:

Corporate Bond Yields: Aaa 12.96%
Baa 14.45%

Treasury Yields: 30-year bonds 12.75%
S&P 500: Dividend yield 5.26%
P/E ratio 12.66X

Market Risk Premium ( S&P500 over LT T-Bond) 7%
Target Capital Structure: Debt/Equity 1
Omni cost of debt estimate 12%
Omni's Levered Beta estimate 1

Should you rely on this analysis? Critically review and comment on the valuation report. What would you do differently? Please revise the valuation model and provide a detail review of the valuation attached.

Purchase this Solution

Solution Summary

You will find the answer to this puzzling question inside...

Solution Preview

Please see the attached Excel file. I have redone the two worksheets with comments and ...

Purchase this Solution

Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Basics of corporate finance

These questions will test you on your knowledge of finance.