Question

2.) In July 2007 Newscorp entered into an agreement to purchase all of the outstanding shares of Dow Jones and Company for $ 60 per share. The number of outstanding shares at the time of the announcement was $ 82 million. The book value of interest bearing liabilities on the balance sheet of Dow Jones was $ 1.46 billion. Estimate the cost of this acquisition to the shareholders of Newscorp

3.) In the acquisition described in the previous question.Newscorp paid $ 60 per share for the outstanding shares of Dow Jones and Company. Immediately prior to the Newscorp bid, the shares of Dow Jones traded at $ 33 per share.
What value did Newscorp place on the control of Dow Jones and Company?


8.)
a.) What does it mean when a company’s free from cash flow is negative in on or more years.?

b.)Do negative values of free cash flow in any way alter or individual the notion that a company’s fair market value equals the present value of its free cash flow discounted at the company’s weighted average cost of capital.?

c.)Suppose a company’s free cash flows were expected to be negative in all future periods. Can you conceive of any reasons for buying the company’s stock?

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