Mercury Athletic Acctg 426 Spring 2022 Purpose To apply restructuring and asset valuation theory and principles Type Mercury Athletic is an individual case

Mercury Athletic Acctg 426 Spring 2022 Purpose To apply restructuring and asset valuation theory and principles Type Mercury Athletic is an individual case. Requirements 1. The case is to be submitted through the Assignments link in Canvas on April, 29, 2022. Please submit any Excel spreadsheets with your write-up. 2. You have been assigned by John Liedtke to evaluate a potential acquisition of Mercury Athletic by AGI. Your analysis and write-up should be to him. The analysis and write-up should address the questions and requirements below. a. Do you believe that Mercury Athletic is an appropriate target for AGI? Please explain your answer. b. Review the projections (2007 to 2011) by Liedtke. Are they appropriate? How would you recommend modifying them? c. Estimate the value of Mercury using discounted cash flow and the base case projections. Include an explanation of any additional assumptions made. You can assume that the risk-free rate is 4.93%, the market risk premium is 5%, the target debt ratio is 20%, and the marginal tax rate is 40%. The cost of equity is 12.92% and the WACC is 10.96%. The terminal growth rate is 4.04% and the EBITDA Multiple is 7.7. You need to estimate the following. i. Free Cash Flow to the Firm through 2011 ii. Terminal value in 2011 estimated using constant growth. Be prepared to defend the growth rate you select. iii. Terminal value using the EBITDA Multiple. iv. Value of the assets (Using both terminal values) d. Estimate the value of Mercury Athletic equity using the abnormal net income approach. How does it compare with your other estimates? e. While you do not need to value Mercury incorporating synergies, you should include in your write-up potential synergies that would increase your valuation. Below is additional information to help in preparing this case. 1. A spreadsheet with data for the case exhibits is in the Cases Module in Canvas.