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Irene has made Sara an offer on the purchase of a capital as

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Irene has made Sara an offer on the purchase of a capital asset. Irene will pay (1) $200,000 cash or (2) $50,000 cash and a 6% installment note for $150,000 guaranteed by City Bank of New York. If Sara sells for $200,000 cash, she will invest the after tax proceeds in certificates of deposit yielding 6% interest, Sara's cost of the asset is $25,000. Why would Sara prefer the installment sale?

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Irene has made Sara an offer on the purchase of a capital asset. Irene will pay (1) $200,000 cash or (2) $50,000 cash and a 6% installment note for $150,000 guaranteed by City Bank of New York. If Sara sells ...

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Irene has made Sara an offer on the purchase of a capital asset. Irene will pay (1) $200,000 cash or (2) $50,000 cash and a 6% installment note for $150,000 guaranteed by City Bank of New York. If Sara sells for $200,000 cash, she will invest the after tax proceeds in certificates of deposit yielding 6% interest, Sara's cost of the asset is $25,000. Why would Sara prefer the installment sale?

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Merger & Acquisition: Team Assignment

This is part of a team assignment. This will be a report to the board of directors that identifies a synergistic acquisition candidate for your company. An acquisition of UST by Altria. The 2006 annual report for both companies are attached.

i. This report should clearly identify the following:
1) Your proposed acquisition terms
2) Price
3) Financing
4) Potential negotiation strategies
j. Supporting financial data should include the following:
1) Price/earnings ratios
2) Book value
3) Current market value
4) Liquidation
5) Diluted price per share
6) Capital Budgeting tools (NPV, IRR, Profitability index, payback - optional: Discounted Payback and Modified Internal Rate of Return)
k. Discuss the general risks inherent in an acquisition strategy.
l. Discuss the specific risks that should be included in the quantitative analysis. For example, what risk factors should be included in the discount rate (sometimes known as the hurdle rate, or required rate of return).
Note: Use MS Excel® spreadsheets as support showing your computations where applicable.

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