Use the attached article and additional description to answer this question:
How might you compare VF’s increase in profit to the premium it paid for Timberland?
VF’s acquisition cost in mid-2011 was $2 billion. For this excercise, assume that all sales increases after 2012 are due to additions and synergies from the VF acquisition. Sales in 2010, 2011, and 2012 were $7.7 billion, $9.4 billion, and $10.9 billion respectively. Assume that sales grew by $1.5 billion in each of the succeeding 5 years (7 years, in all, after 2010) and that the net profit margin after 2012 was 10%. Also assume that VF’s cost of capital is 10% per year. Making these assumptions, you can form a tentative answer to the question (why would your answer have to be tentative)
Sample Solution
