Business, 05.05.2021 17:30 rleiphart1

IntelAir Present Value You are an investment bank intern and your first job is to help with an acquisition project. Your client, Purifier, is an industry leader in the air conditioning business. Recently, Purifier approached your investment bank and expressed its interests in acquiring a start-up called IntelAir. Your project manager assigned you the task of evaluating this acquisition. After one week of research, you gathered the following information about IntelAir.
IntelAir was founded two years ago by a few college dropouts. IntelAir has developed a proprietary temperature sensor antenna and a patented air purifying system. Purifier thinks that acquiring IntelAir will bring valuable economic synergies and expand Purifier’s market share.
IntelAir has signed contracts with several temperature sensor companies to deliver its antenna. The contract specifies that over the next ten years (years 1 to 10), IntelAir would deliver their most up-to-date sensor antennas for $1000/unit. The yearly order volume is 5000 units for a total revenue of $5,000,000. After 10 years, IntelAir anticipates that there will be no more demand for antenna due to landscape changes in the technology space.
The all-inclusive cost of sensor production is $700/unit. However, IntelAir expects that in year 5, there will be a major technology upgrade. IntelAir will incur a one-time upgrading expense in year five, which is not included in the previous all-inclusive cost. The upgrading expense is $800,000.
Also, Purifier intends to sell the air purifying system patent one year after the acquisition (year 1). The patent’s expected selling price is $2,000,000.
Purifier currently uses a discount rate of 10%.
What is the maximum Purifier should pay for IntelAir? (please use two decimal digits in your answer)

Answers: 3

Show answers

Other questions on the subject: Business

Business, 21.06.2019 15:00, dwilburn01

In order to be thoughtful about the implementation of security policies and controls, leaders must balance the need to with the impact to the business operations. doing so could mean phasing security controls in over time or be as simple as aligning security implementation with the business’s training events.

Answers: 1

continue

Business, 21.06.2019 21:30, jayjay5246

On july 1, 2016, killearn company acquired 103,000 of the outstanding shares of shaun company for $21 per share. this acquisition gave killearn a 40 percent ownership of shaun and allowed killearn to significantly influence the investee's decisions. as of july 1, 2016, the investee had assets with a book value of $6 million and liabilities of $1,468,500. at the time, shaun held equipment appraised at $140,000 above book value; it was considered to have a seven-year remaining life with no salvage value. shaun also held a copyright with a five-year remaining life on its books that was undervalued by $562,500. any remaining excess cost was attributable to goodwill. depreciation and amortization are computed using the straight-line method. killearn applies the equity method for its investment in shaun. shaun's policy is to declare and pay a $1 per share cash dividend every april 1 and october 1. shaun's income, earned evenly throughout each year, was $580,000 in 2016, $606,600 in 2017, and $649,200 in 2018. in addition, killearn sold inventory costing $93,000 to shaun for $155,000 during 2017. shaun resold $97,500 of this inventory during 2017 and the remaining $57,500 during 2018.a. determine the equity income to be recognized by killearn during each of these years. 2016 2017 2018b. compute killearn’s investment in shaun company’s balance as of december 31, 2018.

Answers: 2

continue

Business, 21.06.2019 23:30, shannydouglas

Which type of market are you in if your company, along with three other companies, controls 95 percent of the total music industry?

Answers: 3

continue

Business, 22.06.2019 02:00, juli8350

Keshawn used to work for an it company in baltimore, but lost his job when his company decided to use workers in new delhi instead. this is an example of:

Answers: 1

continue

You know the right answer?

IntelAir Present Value You are an investment bank intern and your first job is to help with an acq...