Valuing Project Achieve

Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010). Correct valuation of real assets can present challenges to financial analysts. Different models can be used to arrive at the closest estimate of value and yet certain issues will always arise. This case attempts to tackle two approaches in real asset valuation: Discounted Cash Flow (DCF) analysis and the issues surrounding such, as well as the Black-Scholes Model for Real Options. Questions to be addressed in the study are:

The proposed LBO deal of Comark Building Systems is an attractive investment for Brazos because it fits into Brazos’ “sweet spot”- a reasonable priced company with solid cash flow and good management. We can project cash flow at $6.8 million in 2002 and $12.3 million in 2006. In terms of the purchase price at $40 million, it is very attractive because we can get very good Total Post Money Valuation at $194 million. We can also confirm that the Market Value/EBITDA (1.38) of CoMark is lower than its competitor’s (3.42) when we compare multiple ratios, which means CoMark is undervalued. However, there are two major concerns; gaining competitive advantage and determining comparable valuations.

The purpose of this memo is to document and evaluate the business risks faced by Toy Central Corporation (TCC), as well as audit risks, accounting issues identified, and management assertions affected.

This course applies corporate finance concepts to make management decisions. Students learn methods to evaluate financial alternatives and create financial plans. Other topics include cash flows, business valuation, working capital, capital budgets, and long-term financing.

Week 1 – Introduction – Financial Accounting (Review) Week 2 – Financial Markets and Net Present Value Week 3 – Present Value Concepts Week 4 – Bond Valuation and Term Structure Theory Week 5 – Valuation of Stocks Week 6 – Risk and Return – Problem Set #1 Due Week 7* – Midterm (Tuesday*) Week 8 - Portfolio Theory Week 9 – Capital Asset Pricing Model Week 10 – Arbitrage Pricing Theory Week 11 – Operation and Efficiency of Capital Markets Week 12 – Course Review – Problem Set #2 Due

The impact of Earned Value analysis in managing project cost control is undeniable. When EVM is implemented on a project, there are significant benefits to the project manager and the customer. Project manager benefits include increased visibility and control to proactively respond to issues that can impact project schedule, cost and objectives. Customer benefits include increase confidence in the PM’s ability to manage the project and track the progress of their project. Additionally, EVM provides a wealth of information for accountants. Accountants can use the data to report profitability to the investment community (Wilkens, 1991). There is a true connection between project management and corporate accounting. PMs use data provided by finance departments as inputs to determine cost performance of projects via EVM. This includes information used to create financial statements such as the cash flow statement, used to track the actual cash in hand. Said financial statements are to be crafted in compliance with the U.S. GAAP (generally accepted accounting principles). GAAP impacts every item on a qualifying financial statement. GAAP guidelines dictates how financial statements are produced every step of the way, covering hundreds of different components, according to Stanford University’s Cardinal Money Management website (Gresham, 2012). GAAP encompasses basic accounting principles and guidelines and detailed standards issued by the Financial Accounting Standards Board

In week three, Learning Team E presents a loan package for public held company, Tootsie Roll Industries, Inc., in business for over 100 years. Tootsie Roll is a manufacturer of confectionary products. In addition to sales in the United States, Tootsie Roll’s profits grew in Mexico, Canada, Europe, Asia, South and Central America. This loan package consists of three sections: Financial Ratios, Corporate Strategy-2008 Project: Capital Expenditure, and Loan Approval’s Effect on Tootsie Roll Industry, Inc. Financials.

In week three, Learning Team E presents a loan package for public held company, Tootsie Roll Industries, Inc., in business for over 100 years. Tootsie Roll is a manufacturer of confectionery products. In addition to sales in the United States, Tootsie Roll’s profits grew in Mexico, Canada, Europe, Asia, South and Central America. This loan package consists of three sections: Financial Ratios, Corporate Strategy-2008 Project: Capital Expenditure, and Loan Approval’s Effect on Tootsie Roll Industry, Inc. Financials.

It is important to know the proper technique and method of valuing a company because different people may have different ways of assessing the value; it is also important in understanding the bank’s method of appraising and valuing a company or business

Correct valuation of real assets can present challenges to financial analysts. Different models can be used to arrive at the closest estimate of value and yet certain issues will always arise.

This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.

The success of the model is attributed to Yale’s ability to combine both quantitative analysis (mean-variance analysis) with market judgments to structure its portfolio. In addition, Yale also uses statistical analysis to actively test their models with factors affecting the market, therefore understanding the sensitivity of their portfolio in response to various market changes. Yale also follows and forecasts the cash flow of private equity and real assets in its portfolio to decide the need for hedging.

1. Introduction 2. Analysis of current position 3. Analysis of new project 3.1 Methodologies and processes of Valuation 3.2 processes of Valuation 4. Conclusion

The subject matter of the case is presented as a negotiation between a real estate developer, Hawkins, and a possible anchor tenant, Discount Marketplace. Both parties are represented by professional negotiators: Myra Hart is representing the Hawkins Company and Genia is representing the Discount Marketplace.

MicroPharma will receive 75% of sales in the U.S. and only 10% from sales overseas. v. A firm receives profit for the 10 years after if launches its product in 2003, starting from year 2004. During first years, the sales are increasing in an arithmetic progression starting from 0 in 2003 and reaching the peak in 2008. Since all numbers are in constant dollars, the total sales equal to the sum of sales in each year. If MegaPharma decides not to buy rights or license from MicroPharma, there is 50% chance of successful Phase 2 and 80% chance of successful Phase 3 (conditional on success of Phase 2), and 100% of success in FDA Review. Thus, MegaPharma has 40% chances that the the compound will be approved. If it passes Phase 2, Phase 3, and Review, MegaPharma will spend $52 million. Total MegaPharma’s anticipated sales of the compound are equal to 100 + 200 + 300 + 400 + 500 + 500 + 500 + 500 + 500 + 500 = 4000 million, total revenue is 75% × 4000 = 3000 million, if MegaPharma is the only supplier. If both MegaPharma and MicroPharma are on the market, the anticipated revenue is only a half: $1500 million. Total MicroPharma’s anticipated sales in the US are equal to $3660 million, and the revenue is $2745 million; anticipated sales overseas are equal to $3660 million and the revenue is $366 million, thus, 3111, if MicroPharma is the monopoly and 3111/2 if it has to share the market with