- EstimatethevalueofPinkertonstoWathen.Useadiscountedcashflowapproach(not multiples). The case presents forecasts for the expected scenario as well as for a pessimistic scenario. Use the expected scenario to forecast expected cash flows. Assume that the cost of unlevered equity is 15%.
- Suppose Wathen proceeds with the acquisition of Pinkertons. Which financing alternative do you recommend?
Explain why and provide the necessary calculations to back up your recommendation.
Note: if your valuation for Pinkertons is below $100 million, assume American Brands will lower the price. In other words, irrespective of your answer to question #1, address this question too.
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pinkerton (A) case