Question;1. Figure;9.1In March of 2011, Macklemore Corp. considered an acquisition of Blue;Scholar Learning, Inc. (BSL), a privately-held educational software firm. As a;first step in deciding what price to bid for BSL, Macklemore's CFO, Ryan Lewis;has prepared a five-year financial projection for the company assuming the;acquisition takes place. Use this projection and BSL's 2010 actual financial;figures to answer the questions below.1. What is BSL's free cash flow (in $ millions) for;2011?;A. - $938;B. - $792;C. - $7;D. $122;E. $1,091;F. None of the above.7. Estimate the present value of BSL's free cash flow;(in $ millions) for the years 2011 - 2015. Macklemore's WACC is 8.0 percent.;BSL's WACC is 11.5 percent, and the average of the two companies' WACCs;weighted by sales, is 8.2 percent.;A. - $1.29;B. $628.24;C. $720.58;D. $726.68;E. $743.94;F. None of the above.11 Estimate BSL's value (in $ millions) at the end of;2010 assuming it is worth the book value of its assets at the end of 2015.;Macklemore's WACC is 8.0 percent. BSL's WACC is 11.5 percent, and the average;of the two companies' WACCs, weighted by sales, is 8.2 percent.;A. $628.24;B. $3,669.01;C. $4,297.25;D. $4,412.94;E. $4,984.28;F. $6,951.24;G. None of the above.The following;table presents forecasted financial and other information for Scott's;Miracle-Gro Co.;What is an appropriate estimate of Scott's terminal value of equity as of the;end of 2014?;A. $225 million;B. $3,833.0 million;C. $4,207.5 million;D. $4,365.0 million;E. $6,788.1 million;F. None of the above.Key facts and assumptions concerning FM Foods, Inc.;at December 31, 2011, appear below.;Estimate the appropriate weight of debt to be used when;calculating FM's weighted average cost of capital.;A. 11.5%;B. 19.3%;C. 80.7%;D. 88.5%;E. 100.0%;F. None of the above.Estimate FM's weighted-average cost of capital.;A. 6.46%;B. 6.58%;C. 11.27%;D. 11.32%;E. 11.52%;F. None of the above.;Estimate FM's after-tax cost of debt capital.;A. 2.21%;B. 4.10%;C. 4.55%;D. 6.30%;E. 7.00%;F. None of the above.
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