Explore BrainMass

Explore BrainMass

    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? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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.

    © BrainMass Inc. brainmass.com December 24, 2021, 5:12 pm ad1c9bdddf


    Solution Preview

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

    Solution Summary

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