Dell Emc
Dell Emc
Dell Emc
Dell EMC
Beta 0.74 1.15
Pre-tax cost of debt 5.00% 5.00%
Tax rate -8.81% 23.07%
Debt to Capital Ratio 79.46% 18.86%
Dell EMC
Cost of Equity = 6.55% 8.99%
After-tax cost of debt = 5.44% 3.85%
Cost of capital = 5.67% 8.02%
Value of Firm
PV of FCFF in high growth = $ -861.78 $ 7,961.54
Terminal value = $ -6,013.96 $ 45,613.73
Value of firm today = $ -5,426.91 $ 38,977.65
Value of Synergy
Value of independent firms $ 33,550.74
Value of combined firm $ 31,869.32
Value of synergy $ -1,681.42
After merger
1.74199
5.00%
28.23%
44.21%
68193
3593
13.63%
50.00%
9.78%
50.00%
4.89%
$ 5,821.86
$ 39,275.03
$ 31,869.32
In terminal year
1.73
1,943,000,000
20.06
2,543,838,000
0.11
19.45
All Values in $ Mn DELL
EBIT -316
EBT -1215
Capital Employed 22844
ROCE -1.38%
Long Term Debt 11234
Interest expenses 899
Pre tax debt rate 8.00%
Total capital 14138
D/(D+E) Ratio 79.46%
Tax Expenses 107
Tax Rate -8.81%
Market rate 8.10%
Risk free rate 2.17%
Risk premium 5.93%
45585
11710
23525
EMC CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts and notes receivable, less allowance for doubtful accounts of $90 and $72
Inventories
Long-term investments
Goodwill
Total assets
Accrued expenses
Short-term debt
Deferred revenue
Deferred revenue
Long-term debt
Other liabilities
Total liabilities
Shareholders’ equity:
Preferred stock, par value $0.01; authorized 25 shares; none outstanding
Common stock, par value $0.01; authorized 6,000 shares; issued and outstanding 1,943 and 1,985
Retained earnings
Non-controlling interests
2015 2014
$ 6,549 $ 6,343
2,726 1,978
3,977 4,413
1,245 1,276
566 653
15,063 ###
5,508 6,334
3,850 3,766
2,149 2,125
17,090 ###
1,164 952
1,788 1,611
$ ### $ ###
$ 1,644 $ 1,696
3,123 3,141
609 852
1,299 —
6,210 6,021
12,885 ###
461 306
4,592 4,144
5,475 5,469
480 431
23,893 ###
— —
19 20
— —
21,700 ###
(579 ) (366 )
21,140 ###
1,579 1,629
22,719 ###
$ ### $ ###
EMC CORPORATION
CONSOLIDATED INCOME STATEMENTS
(in millions, except per share amounts)
Revenues:
Product sales
Services
Cost of services
Operating income
Interest expense
Other income (expense), net
Net income
Net income per weighted average share, diluted attributable to EMC Corporation common share
94 123 128
41 (275 ) (285 )
3,909
2,882 3,762 3,865