Cases Questions

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FIN 620, Fall 2006 CASE QUESTIONS DR. KISS Please allow these questions to serve as a guide when you prepare your case write-up in accordance with the syllabus or other instructions. Table of Contents Page Case: Name and Number, Bruner 5e Note Number I. C12- Best Practices—WACC No Questions II. C2- Bill Miller & Value Trust 2 III. C5- Financial Detective, 2005 Contained in Case IV. C7- Body Shop Intl* Contained in Case, but see page 3 V. C6- Krispy Kreme Doughnuts, Inc. 4 VI. C17- The Investment Detective* Contained in Case VII. C28- Intro. to Debt Policy & Value* No Questions, but review M & M Theory on debt and value of the firm. VIII. HBS Case-…show more content…
4. In light of your answer to question 3, what accounts for the firm’s recent share price decline? 5. What is the source of intrinsic investment value in this company? Does this source appear on the financial statements? IX. C16- The Boeing 7E 7* Suggested Questions for Advance Assignment to Students 1. What is an appropriate required rate of return against which to evaluate the prospective IRRs from the Boeing 7E7? a. Please use the capital asset pricing model to estimate the cost of equity. At the date of the case, the 74-year equity market risk premium (EMRP) was estimated to be 8.4%. Which beta and risk-free rate did you use? Why? b. When you used the capital asset pricing model, which risk-premium and risk-free rate did you use? Why? c. Which capital-structure weights did you use? Why? 2. Judged against your WACC, how attractive is the Boeing 7E7 project? a. Under what circumstances is the project economically attractive? b. What does sensitivity analysis (your own and/or that shown in the case) reveal about the nature of Boeing’s gamble on the 7E7? 3. Should the board approve the 7E7? X. C26- Jet Blue Airways, IPO Valuation* Suggested Questions for Advance Assignment to Students 1. What are the advantages and disadvantages of going public? 2. What different approaches can be used to value JetBlue’s shares? 3. At what price would you

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