The case provides the opportunity to forecast the cash flows associated with the proposed acquisitions and to value those projections using discounted cash flows methods as well as transaction and trading multiples. You can find the data for this case on the course website in a spreadsheet named: Radio OneExhibits.xls.

1.Why does Radio One want to acquire 12 urban stations from Clear Channel Communications in the top 50 markets along with the nine stations in Charlotte, NC, Augusta, GA and Indianapolis, ID? What are the benefits and risks?[HINT: Be clear and concise. You should not spend more than 2 paragraphs in answering this question.]

2.What price should Radio One offer based on a discounted cash flow analysis? Are the cash flow projections reasonable? To answer this question I will expect a quantitative and detailed analysis to the following parts of the valuation:

a. Projected cash flows.

projected capital expenditures and changes in working capital

c. Assess the reasonableness of the forecasts.

d. Estimate the discount rate.

e. Simple and alternative approaches to terminal values.

f. Provide with sensitivity analysis of the parameters you consider relevant.