Appraisal Report of Air Thread Connections

Topics: Discounted cash flow, Cash flow, Net present value Pages: 3 (1011 words) Published: May 26, 2013
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Appraisal report of Air Thread connections Jennifer Zhang Robert Zimmerman (Vice President of ACC) New York Business Review, august 2007, volume 3, pp34-89 Appraisal Report

ABSTRACT This paper intends to analyze and evaluate the Air Thread Connection (ATC) Company and determine whether the acquisition by the American Cable is acceptable. From the outset, it is observable that, the acquisition would give American Cable access to wireless technology and the wireless spectrum. Thus acquisition offers more competitive service bundles on company’s service delivery. However, the real situation and the anticipated benefits will only be ascertained by insight analysis. MAIN METHODOLOGY ON VALUING ATC APV METHOD: It is imperative to note that, discounted cash flow methodology is applied in valuing Air Thread Connection Company. This is critical in establishing the viability of the anticipated acquisition. This methodology requires use of the projections from Air Thread Connections, which are given in the Exhibit 1. This allows calculation of the total revenue, EBITDA, EBIT and the Unlevered Net Income. Furthermore, the depreciation and Amortization, Capital Expenditures and the assumptions projected in Exhibit one case to make the adjustments in working Capital. These will all facilitate calculation of the Unleveraged Cash Flow (UFCF) from 2012 which stable increases. Consider the computations referencing income statement on separate sheet. TERMINAL VALUE Furthermore terminal value as a key valuation factor which can be calculated in two ways namely perpetuity model and market value of comparable companies. The perpetuity model involves use of terminal year free cash flow (FCF), growth of terminal year cash flow over the previous year and WACC with additional debt (COMFORT & BRIEGER, 2002). On the other hand, similar company model requires the EBIT and market value to determine the EBIT ratio of similar companies in...

References: BODIE, Z & MERTON, R. C. (2000). Finance. Upper Saddle River, NJ, Prentice Hall. BANKS, E. (2011). Finance. New York, NY, Routledge. AHAMED, L. (2009). Lords of finance: the bankers who broke the world. New York, Penguin Press. GROPPELLI.A.A & NIKBAKHT.E (2000). Finance. Hauppauge, N.Y., Barron 's. RUSSELL, J. D., & REEVES, F. W. (2006). Finance. Chicago, Ill, the University of Chicago Press. COMFORT, J., & BRIEGER, N. (2002). Finance. New York, Prentice Hall International JEAN, W. H. (2003). Finance. [New York], Dryden Press. CASSEDY, P. (2004). Finance. San Diego, Calif, Lucent Books
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