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9 Mondo Cult Inc

Business Mar 29, 2022

9 Mondo Cult Inc. is considering acquiring pulpless.com. If the unleveraged discount rate appropriate for the acquisition is 0.12 and pulpless is estimated to generate the following incremental cash flows to Mondo, what is the value of pulpless's operations to Mondo?

Year

1

2

3

4

Free cash flow

$2

$2

$2

$6

Unlevered horizon value

 

 

 

34

Tax shield

  1

  1

 1

 4

Horizon value of tax shield

 

 

 

6

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