Case Question - 2051 Words

Warren E. Buffett, 2005 Case Questions: 1. What is the possible meaning of the changes in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement? Specifically, what does the $2.17-billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp? Based on the multiples for comparable regulated utilities, what is the range of possible values for PacifiCorp? What questions might you have about this range? Assess the bid for PacifiCorp. How does it compare with the firm’s intrinsic value? As an alternative, the instructor could suggest that students perform a simple discounted cash flow (DCF) analysis. How well has Berkshire Hathaway performed? How well has it†¦show more content†¦3. What is the weighted average cost of capital (WACC) and why is it important to estimate it? Is the cost of capital something that managers set? Who sets it? 4. Calculate the WACCs for Coca-Cola and PepsiCo. A ssume a tax rate of 35 percent. Be prepared to explain your assumptions for the following components: a. b. c. d. e. f. 5. 6. 7. Kd Ke Rf Beta Market risk premium Weights of debt and equity capital Interpret the results of your WACC calculations. What observations can you make? Calculate EVA for 2001 to 2003 using the forecasts given in the case and the WACCs you have estimated. Interpret the results of your EVA calculation. If you had to choose between Coca-Cola Co. and PepsiCo, which one would you choose? Why? The Boeing 7E7 Case Questions: 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 74year equity market risk premium (EMRP) was estimated to be ___. Which beta and risk-free rate did you use? Why? When you used the capital asset pricing model, which risk-premium and risk-free rate did you use? Why? Which capital-structure weights did you use? Why? b. c. 2. Judged against your WACC, how attractive is the Boeing 7E7 project? a. b. Under what circumstances is the project economically attractive? What does sensitivity analysis (your own and/or that shown inShow MoreRelatedCase Study Questions1940 Words   |  8 Pagesfor AGI? Why or why not? b. Review the projections by Liedtke. Are they appropriate? How would you recommend modifying them? c. Estimate the value of Mercury using a discounted cash flow approach and Liedtke’s base case projections. c. Do you regard the value you obtained as conservative or aggressive? Why? e. How would you analyze possible synergies or other sources of value not reflected in Liedtke’s base assumption? a. Is Mercury an appropriate targetRead MoreQuestion case study Essay681 Words   |  3 Pagesï » ¿ List questions Case Studies Bella Healthcare India 2012, HBS #4441 STRAT MAGT – Internationalization; product development; â€Å"local for local† strategy UD: 12/12/2012 Overview and Objectives: The case traces the path taken by an overseas operation from low cost manufacturing to higher value-added activities such as RD. It asks students to consider the factors driving the evolution and this timing and circumstances that would make it successful. It creates the opportunity toRead MoreCase study discussion questions1663 Words   |  7 Pagesï » ¿Case Study Discussion Questions for Case Studies in Entrepreneurial Management and Finance Professor Edward H. Chow Spring 2013 1. (2/20) Introduction and get acquainted: Entrepreneurship and finance Lecture and discussion: A perspective on Entrepreneurship, Howard H. Stevenson, 1988 (9-384-131) How is finance related to corporate objectives? Note on the financial perspective: What should entrepreneurs know? William A. Sahlman, Harvard Business Publishing (9-293-045) In your view, whatRead MoreCases Questions1421 Words   |  6 PagesFIN 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 Read MoreCase Questions1691 Words   |  7 PagesCASE QUESTIONS Cash Flows and Value. Cost of Capital Case 1: Hop-In Food Stores, Inc. 1. Determine the correct price for this particular IPO. Use several methods to do this and compare them. 2. What extra information would you try to acquire in a real life situation? Case 2: Chem-Cal Corporation 1. How do you calculate the WACC for this firm? 2. What is the cost of capital of the debt, preferred stock, and common stock (assume the equity beta is 1.22)? 3. Calculate the WACC. How can a WACC be usedRead MoreCase Question1230 Words   |  5 PagesThis is an outline of the three-step writing process to apply to cases. Answer all questions directly on this form. Then add a page break, and write your message in response to the case on the following page. For the three-step process questions, you may use short phrases and sentences for your answers. Student name? Javier Pita Case number and short name for case? Case number 12. Short name: Email privacy policy. I. Plan A. Analyze the Situation 1. What is your generalRead MoreCase Question2035 Words   |  9 PagesWarren E. Buffett, 2005 Case Questions: 1. What is the possible meaning of the changes in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement? Specifically, what does the $2.17-billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp? Based on the multiples for comparable regulated utilities, what is the range of possible values for PacifiCorp? What questions might you have about this range? Assess the bid forRead MoreCase Questions1966 Words   |  8 PagesManagement Strategy Case Questions Case 5: Panera Bread Company 1. What is Panera Bread’s strategy? Which of the four generic competitive strategies discussed in Chapter 3 most closely fit the competitive approach that Panera Bread is taking? What specific kind of competitive advantage is Panera bread trying to achieve? 2. What does a SWOT analysis of Panera Bread reveal about the overall attractiveness of its situation? Does the company have any core competencies or distinctive competenciesRead MoreCase Study Questions1276 Words   |  6 PagesBUSINESS POLICY SPRING TERM 2012 BUS 450 Questions for the Next Several Cases Friday, February 24 Case: Competition among NA Warehouse Clubs (case 4 in text) 1. What is competition like in the North American wholesale club industry? Which of the five competitive forces is strongest and why? Use the information in Figures 3.4, 3.5, 3.6, 3.7, and 3.8 (and the related chapter discussions on pp. 57-70) to do a complete five-forces analysis of competition in the North AmericanRead MoreCase questions Essay1051 Words   |  5 Pagesï » ¿Principles of Corporate Finance Comprehensive Case Questions Tire City, Inc. 1. Evaluate Tire City’s financial health. How well is the company performing? 2. Based on Mr. Martin’s prediction for 1996 sales of $28,206,000, and for 1997 sales of $33,847,000 and relying on the other assumptions provided in the Tire City case, prepare complete pro forma forecasts of TCI’s 1996 and 1997 income statements and year-end balance sheets. As a preliminary assumption, assume any new financing required will