Radio One, Incorporated

Radio atomic number 53, Incorporated In general ? Assume a corporate tax rate of 34%, and a market risk premium of 7. 2%. ? Data in exhibit 9 are in $1,000. ? Show and explain entirely your calculations, i. e. the reader/grader must be able to follow your reasoning and be able to understand all your calculations without using time to reconstruct your numbers. ? dedicate additional assumptions if necessary, but make them explicitly. ? Good luck. ? Questions 1.Why does Radio bingle want to acquire the 12 urban place from Clear ancestry Communications in the top 50 markets along with the 9 stations in Charlotte, North Carolina, Augusta, Georgia, and Indianapolis, Indiana? What are the benefits and risks? 2. What expenditure should Radio One run on a discounted cash flow analysis presume all equity financing? ? Show and explain cash flows items indispensable to be estimated to get applicable cash flows in 2001 2004. Estimate pertinent cost of capital to calculate PV of relev ant cash flows assuming encyclopedism is all equity financed. ? Estimate terminal value of potential acquisitions subsequently forecast period ends in 2004. ? What bell should Radio One offer on a discounted cash flow analysis using relevant cash flow in 2001 2004 and a terminal value in 2004? ? Are the cash flow projections (in forecast period and terminal value) credible?If not Revise your calculations. 3. What price should Radio One offer on a transaction seven-fold for comparable transactions analysis? What price should Radio One offer on a trading multiple of comparable firm analysis? 4. Assuming that Radio Ones stock price is 30? BCF, can it offer as oftentimes as 30? BCF for the new stations without reducing the stock price? 5. What price should Radio One offer for the new stations?