Interco Harvard Case

We also know that Louis was contemplating a possible IPO exit strategy before the end of the holding period term. To estimate a multiple for this IPO exit, we need to look at the Price/Earnings ratio for Dollarama. Using the same methodology as above, we compared Dollarama to the same group of companies and computed the average P/E ratio for the set, see Exhibit 6a. We will consider the values for the year 2005 and will take a multiple of 24.6 for an eventual IPO exit.

For the purpose of calculating the net present value of the project, an appropriate cost of capital has to be calculated at which free cash flows of the project should be discounted. Since the project will be solely financed by selling new shares, cost of equity will be used as the discount rate. Beta for the company can be assumed to be equal to average of the betas of the competitors of the company. This average beta value comes out to be 1.2. Risk free rate is 0.17% while risk premium has been estimated to be 6%. Thus by putting these values in CAPM formula, we can find the cost of equity for the company which is 7.39%.

The background of this paper we need to mention is that West Coast Fashions, Inc. (WCF), a large designer and marketer of branded apparel announced a strategic reorganization calling for a divestiture of certain assets, and one of the divisions it intended to shed was Mercury Athletic, its wholly owned footwear subsidiary. John Liedtke, the head of business development for Active Gear, Inc. (AGI), a privately held athletic and casual footwear company, contemplated an acquisition opportunity of Mercury that would significantly improve his business. So, he wanted to evaluate this opportunity.

For calculations of the acquisition price, the P/E is taken to be 8.6. The acquisition price is calculated by multiplying this value with the historical average of net income. Thus, the acquisition price comes out to be $186,215,800, which is $189,186,673 less than the enterprise value.

Facts: Gawley was a police officer who worked for Indiana University for several years. She sued the college because she noted sexual harassment by a higher-ranking officer than she was. She also sued because she felt she was part of a hostile work environment and that officers in her department retaliated against her for filing a complaint with the college. Her final argument was that there was spoliation of evidence. The district court found in favor of the employer. The case did not go to trial because the district court granted summary judgment. Summary judgment is used to avoid trials. The decision was made based on two key decisions made by the Supreme Court in other cases and that the university was able to establish an affirmative defense. The university “may assert an affirmative defense that examines the reasonableness of the employer’s and the target’s conduct” (Kaplin & Lee, 2014, p. 167). Gawley then appealed to the United State Court of Appeals, Seventh Circuit. This case brief will outline the question, holding, reasoning, and significance of this case as it was decided by the United States Court of Appeals, Seventh Circuit.

Our estimated cost of capital, 20.81%, is lower than Ricketts’ expected return, 30%-50%, thus the investment is worthy. However, it’s higher than other pessimistic members’ expected return, 10%-15%, making the decision more complex and requiring further valuation。

d) Calculate the new value per share after the capital structure change. (Hint: use your answers to parts b and c.)

To achieve that Ice-Fili will highlight its main asset: the fact that their ice creams are made using only natural products. This corresponds perfectly to the needs of Russian consumers and this is a very differentiating element with respect to its competitors.

in our calculations, as this company exhibited dramatic value differences to others in the sample, (likely to skew our results and prove misleading). Using the average of the revised sample field for each ratio, we inserted Torrington’s values where appropriate to generate an entity value. The findings generated two values for Torrington, 606 million and 398 million. Taking the average of these two numbers, Torrington exhibited a relative value of 502.41 million. Because of the lack of related information given in the case, and the often large differences in measures amongst competitors, different capital structures, internal management strategies, there remained many unknowns in our model. We decided it would be best to use this valuation to reaffirm our assumptions in our DCF valuation. (Please see exhibits)

The change in the growth assumption has significant impact on the stock price. Under the high estimate of growth rate 236%, the new price per share is $107.56. Under the low estimate of growth rate 35%, the new price per share is $2.36.

There is a great chance that the deal would take place. Even though the cash flows from the Joint Venture will be roughly the same for both Jersey and Prince, except for the assistance fee, the fact that they are subject to different Cost of Capital leads to a big difference in their valuation for the joint venture. As Prince is a family-owned company, Mr. Nakit’s cost of capital is significantly higher than that of Jersey, which is a well-diversified company, which means the 50% of the joint venture would be worth more for Jersey than for Prince. After our valuation, we think Prince will accept for anything above 3.105 million dinars. And Jersey would be willing to pay

Assume the ROE and payout ratio stay the same for the next 4 years. After that competition forces ROE down to 11.5% and the payout increases to 0.8. The cost of capital is 11.5%. (15 points)

1a. Please use the capital asset pricing model to estimate the cost of equity. At the date of the case, the 74 over T-bonds. Which beta, risk-free rate, and risk premium did you use? Why? Financing Components Debt Equity Market Values Weight Cost of Capital (After Tax) $ 6,823,736,197 0.85 3.72% $ 1,176,263,803 0.15 28.18% Total: $ 8,000,000,000 1.00 WACC WACC Inputs: Beta: Risk-Free Rate: Market Risk Premium: Pre-tax Cost of Debt: Income Tax Rate:

It is determined that the company worth is $856,518 with a share price of $351.03 per value as per the discounting dividend cash flow valuation approach..In appraising the anticipated premerger performance of the company, the weighted average cost of capital is computed; the worth of the WACC for FVC is 9.2% as depicted in

Although Blaine’s current financial situation is sound with no debt, its current balance sheet is under levered and over liquid