VALUATION TECHNIQUES Vault Guide to Finance Interviews Valuation Techniques How Much is it Worth? Imagine yourself as the CEO of a publicly traded company that makes widgets. You’ve had a highly successful business so far and want to sell the company to anyone interested in buying it. How do you know how much to sell it for? Likewise, consider the Bank of America acquisition of Fleet. How did B of A decide how much it should pay to buy Fleet? For starters, you should understand that the value
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The Guillermo Furniture Store Scenario Susie Smith FIN/571- Corporate Finance September 26, 2011 Danica Djordjevich, Instructor The Guillermo Furniture Store Scenario Guillermo Navallez is the owner of a furniture manufacturing company located near his New Sonora, Mexico home. This company specialized is handcraft products priced at a slight premium for the quality they represent. This scenario presents a challenge from the arrival of new competition from overseas that has entered the
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term government bond + risk premium =8.95 % + 1.10 % = 10.05% 3) Finding cost of equity of the lodging division; Re=Rf + (Rpm)*beta =8.95% + (7.43%) * 1.128 = 17.33% Using spread of S&P 500 and Govt. bond as the premium. 4) WACC for the lodging division; =0.74 * (10.05%) + 0.26 (17.33%) = 11.94% Restaurants Division 1) Finding beta The more comparable business in restaurants industry to the restaurants division of Marriot is Wendy’s International, where levered
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International Financial Management Case Analysis of: The Continuing Transformation of Asahi Glass: Implementing EVA TABLE OF CONTENTS * BACKGROUND * CORPORATE GOVERNANCE * FEATURES IN ASIA * MAIN BANK * ORGANIZATIONAL CHANGE * IMPLEMENTING EVA 1. ADVANTAGES 2. DISADVANTAGES * PREFERENCE TO EVA * RECOMMENDATION Background Asahi Glass is an MNC, based in japan. Its products include flat glass, chemicals, and electronics
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expenditure of a $4.5 billion in 1991 (an increase from the previous year). However, it was largely due to these expenditures that the company was able to process heavy Alaskan crude oil more efficiently and also get a good return on their investment. For example, the light product yield in their refiners was higher than the industry average. Some of their investments were also directed towards environmental projects and PPC anticipate spending another $3 billion in the next five years in order to meet
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specialized financial and contractual arrangements similar to project financing, all of which are valued in dollars. Value-creating Investments: Discounted Cash Flow (DCF) methods, involving debt-free cash flows and a hurdle rate equal to or derived from the WACC for the project of division, are typically used to evaluate most prospective investment, yet for overseas projects are evaluated as streams of future equity cash flows and discounted as a rate based on the cost of equity. Optimize Capital Structure:
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Internet activities. It would cost $10 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 10% of the year's projected sales; for example, NWC0 = 10%(Sales1). The servers would sell for $24,000 per unit, and Webmasters believes that variable costs would amount to $17,500 per unit. After Year 1, the sales price and variable costs will increase at the inflation rate of 3%. The company’s
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observed that values calculated from all the three methods were almost the same. We calculated the WACC using the return on assets derived by unlevering the equity beta of Celeron, which was comparable to the project at hand since Celeron was in the business of operating natural gas pipelines and processing facilities. To ensure a thorough discussion, we did a sensitivity analysis by calculating the WACC using a range of different capital structures namely Goodyear’s and Celeron’s current debt to market
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Very good. There is an awful lot of good work in the construction of this document: sensitivity analysis around the WACC values and consideration of other Economic Factors. It did not quite all come together perfectly at the end. See the detailed comments that I have made in the RHS margin. The Boeing 7E7 Team 14 Constantine Brocoum Courtney Delia Stephanie Doherty David Dubois Radu
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weighted-average cost of capital (WACC) for Boeing’s commercial-aircraft business segment in order to evaluate the IRRs. As a result of that analysis, the students identify the key value drivers and distinguish, on a qualitative basis, the key gambles that Boeing is making. The general objective of this case is to exercise students’ skills in estimating a weighted-average cost of capital and cost of equity. The need for students to estimate a segment WACC draws out their abilities to critique
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