Rocky Mountain Advanced Genome -Case Analysis

When considering bankruptcy, pre-bankruptcy planning is one of the most important steps for Harv and Lois. In a Chapter 7 bankruptcy, the TIB will take all non-exempt valuable property that he can sell to distribute the money to the creditors. The main idea behind the Chapter 7 bankruptcy is ‘liquidation’. However, Harv and

Before moving forward to compute the present value of these cash flows, a terminal value is required to forecast the long term value of the company after 5 years. . Following formula is used to calculate the terminal value.

On the figure above, we can see that the terminal value is used as the horizon in forecasting the three projects. We also have to consider the condition of when we should set the terminal value. The key to set the horizon is when the stable growth of forecasted cash flows begin. When the stable growth begins, stop forecasting the

Market value per share = Book value per share = $12,000 / 750 shares = $16 per share

> The book value—cost less accumulated depreciation—of a plant asset may differ significantly from its fair value. In fact, if an asset is fully depreciated, it can have zero book value but still have a significant fair value.

The current assets are those which are readily convertible into cash and cash equivalents due to their highly liquid nature and also form part of working capital of the company’s operations. However, the long term assets in contrast are not liquid because since they have a useful life of more than a year and hence their full value cannot be easily realized within

In June 2000, the publicly funded Human Genome Project (HGP) and the private firm Celera Genomics Inc. announced that they had completed sequencing the human genome. This unprecedented accomplishment is expected to enable doctors to diagnose, treat and even prevent numerous genetic diseases. As these two entities worked on sequencing the human genome, there was also a separate and less publicized race to patent as many human genes as possible.

Next, the terminal value at year ten was calculated. The following formula was used to do so: terminal value at year 10 = (FCF at year 11)/(WACC - g). This time we used the long-term growth rate of 7up, which was given by the case as 1% less than the industry rate. This resulted in a terminal value of $848M with its present value calculation being $231M.

a) We calculated the total value of AirThread (before considering any synergies) by subtracting the value of the non-operating assets from the going concern value. This gave us a total value of $6237.85.

The fair value of an asset is defined as ‘the price that would be received to sell an asset paid to transfer a liability in an orderly transaction between market participants at the measurement date” (Kieso, Weygandt, & Warfield, 2012). It is a market based measure (Averkamp, 2014). Over the past few years, Generally Accepted Accounting Principles has called for the use of fair value measurement in a company’s financial statements. This is what is referred to as the fair value principle (Kieso, Weygandt, & Warfield, 2012). The fair value of an asset or liability is based on an estimate of what the asset should be worth at the time of sale. This gives rise to some conflict among accounting professionals. It is believed that fair value may not be as accurate

1. Assume there are three separate real estate companies US Realty (which uses the cost model), UK Realty (which uses the revaluation model, and International Realty (which uses the fair value model). Assume that on December 31, 2003, each company pays £1,000 cash to obtain investment property comprising of land with negligible value and an office building worth £1,000.  The building has a 10 year useful life, has no residual value, and is expected to provide a constant stream of economic benefits over time.   What is the accounting entry for each company for the following four scenarios:

The enterprise value of High Country was estimated in order to compare whether the acquisition price asked for it is would create impairment in the future. The forecasted financials of High Country is attached in the appendix. The discounted cash flow method gave an enterprise value of $37.56M. Assumptions are given in the appendix as to how this amount was achieved. This amount is way above the asking price of $13.2M (in excess of $24.36M). The excess amount will be recorded on PG's balance sheet as goodwill if the acquisition occurs. As this goodwill amount is very large, it is expected not to be amortized in the future. Peterson has noted that PG would not consider the acquisition if it is anticipated that there will be future impairment and write-down of goodwill created by the purchase of High Country. As the book value(37.56M) is so much higher than its current market value ($13.2M), it is very unlikely that the goodwill will be impaired in the future. With that said, there will be no write down of goodwill. It must also be noted that based on the analysis of this report, High Country is heavily undervalued. The acquisition of High Country will be come off as a smart buy for PG. Overall, PG should look into

We valued the company using four different methods; Net Present Value, Internal Rate of Return, Modified Internal Rate of Return and Profitability Index. We began with the Net Present Value, or NPV, calculation. NPV values an investment’s profitability based on the projected future cash inflows and outflows of the investment, discounted back to present value using the WACC. The calculations for NPV are presented in Appendix 2. We started by separating cash inflows and outflows by each year. We used Bob Prescott’s estimates for the revenue per year and related operating costs of cost of goods sold as

Finally, we come up with the value for the operating after-tax operating cash flows for the next three years and the terminal value. We calculate the present value of these cash flows by discounting by the unlevered cost of capital, rU given as 8.7%, which gives us a value of the unlevered firm of ca. $566m.

The methods for valuing companies can be classified in six groups: MAIN VALUATION METHODS BALANCE INCOME MIXED CASH FLOW VALUE OPTIONS SHEET STATEMENT (GOODWILL) DISCOUNTING CREATION .Book value . Multiples Classic Equity cash flow EVA Black and .Adjusted .PER Union of Dividends Economic Scholes . Sales Free cash flow Investment value European profit .Liquidation .P/E EBITDA Accounting Capital cash flow Cash value option value .Other Experts APV added Expand .Substantial multiples Abbreviated CFROI the project value income Delay the others investment Alternative uses 2.1 Balance sheets – Based methods (shareholders’Equity) These methods seek to determine the company’s value by estimating the value of its assets. These are traditionally used methods that consider that a company’s value lies basically in its balance sheet. They determine the value from a static viewpoint, which, therefore, does not take into account the company’s possible future evolution or money’s temporary value. Neither do they take into account other factors that also affect the value such as: the industry’s current situation, human resources or organization problems, contracts, etc. that do not appear in the accounting statements. Some of these methods are the following: Book value, adjusted book value,