Business, 29.04.2021 01:40 leannehounschell

Question 4. Berkshire offered $142 million in the deal. If you compute your continuation value as a growing perpetuity, at what (approximate) growth rate would you obtain a value of $142 million for the assets? (Note: this could be negative.) Given your analysis (i. e., in light of this implied growth rate), what is your assessment of the deal? Recall that there is also a financial component of the deal. Berkshire is offering Media General a $400 million loan at an 11.5% discount to face value (meaning that Berkshire will receive at least $46 million in net present value from the loan). In addition, Berkshire is receiving warrants that would allow it to purchase 4.65 million of Media General’s shares for $0.01 per share. At the current stock price of $4.18, this would amount to $19 million in value if Berkshire exercised the right immediately. Do these extra sources of value change your opinion? Why or why not? (Note: there is not necessarily a "right" answer here, but a well-supported position is expected.)

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Question 4. Berkshire offered $142 million in the deal. If you compute your continuation value as a...