...this acquisition. Table 1 Assumptions Laminate Technology reduces power by a mean of 17.5% Laminate Technology is depreciated over 10 years Sodium Chlorate price growth is 8%, per annum Power cost (per KWH) growth is 12%, per annum Plant Life is 10 years Plant Salvage Value is zero EBIT is flat after 1984 Capital Expenditures: $600,000 per annum after 1984 Net Working Capital Remains flat after 1984 Definition of “Flat” Reference Pg 3, HBS 9-280-102 Pg 3, HBS 9-280-102 Pg 4, HBS 9-280-102 Pg 4, HBS 9-280-102 Pg 1, Assessed work Sheet Pg 1, Assessed work Sheet Pg 1, Assessed work Sheet Pg 1, Assessed work Sheet Pg 1, Assessed work Sheet Pg 4 http://www.imf.org/external/pubs/ft/wp/2006/wp06218.pdf 6.5% is the Equity Risk Premium Tax rate is 48.69% From 1984 to 1989, the following growth rates are used 4 year Growth rate is used for Variable Costs Capital investment is based on figures from 1980-1984 PPE and depreciation is based on figures from 1980-1984 Beta Debt is zero Debt to Equity Ratio: 35% : 65% Plant: Valuation starts in 1980 Laminate Tech valuation starts in...
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...CALIFORNIA Marshall School of Business Fall 2011 Financial Analysis and Valuation FBE 529 Monday, Wednesday Class Instructor: Lloyd Levitin Time and Place: 3:30 – 4:50 P.M.; JKP 212 Office: Accounting 301E Office Hours: M, W: 2:15-3:15 P.M.; T: 5-6 P.M., and by appointment Office Phone (USC): 213-740-6524 Office Phone (Home): 310-858-0260 Email Address: levitin@marshall.usc.edu (preferred method of communication; please indicate on your email communication the class you are in and when it meets). Teaching Assistant: Brian Kaemingk (email: brian.e.k@gmail.com Course Website: On Blackboard http://blackboard.usc.edu COURSE OBJECTIVE Understanding what determines the value of a firm and how to estimate that value is a prerequisite for making rational business decisions. Entire industries (investment banking, securities analysis, and consulting) have grown prosperous providing valuation skills to investors and managers. The objective of this course is to give a general grounding in the valuation approaches used by successful practitioners. We cover discounted cash flow models, market multiple models, as well as specialized models used for M&A transactions and LBOs. We focus on valuation of businesses at the divisional and corporate levels. The course emphasizes practical and “real world” applications of valuation methodologies. The course is of interest to those contemplating careers...
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...has researched and used financial concepts to aid his thought process to turn business around and continue to remain open. Some of these concepts will be related in this paper. Self-Interested Behavior Guillermo, as a business owner follows one of the first principles of finance that the decisions made in his business are made in his own self-interest. “This principle says that when all else is equal, all parties to a financial transaction will choose the course of action most financially advantageous to themselves” (Emery, Stowe, & Finnerty, pg. 20 2007). Guillermo has kept his operation small over the years and enjoyed his modest success by choice. As a business owner every decision made effects his life. When faced with new competition Guillermo considered expanding through acquisition. He chose not to do so, as “that could affect his time with his family in ways that he will not enjoy” (University of Phoenix Student Portal Corporate Finance, par. 3, 2012). Behavior Principle Based on Guillermo’s decision to remain local and independent, he conducted research into his competition to understand how they operate and what made them successful. This was done not only to aid in continued competition but also to see what he could do differently. Guillermo is using the behavior principle by looking at what others are doing...
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...What is an IPO and why is it such a big deal? Is this a good idea for JetBlue? Explain. When a privately held company makes its stock available to the general public for the first time on a securities exchange, this is known as the company’s Initial Public Offering (IPO). The IPO can consist of an initial issue of either debt or equity. The IPO process is also referred to as a private company “going public”. There are numerous benefits associated with going public. IPO benefits include enlarging and diversifying a company’s equity base, allowing cheaper access to capital, improving public image, attracting better management and employees through stock options, enabling transfer of company ownership through mergers/acquisitions, and providing increased financing opportunities (through equity, convertible debt, bank loans, etc.). IPO Process Executing an IPO is an extensive, time-consuming, and complicated process for the senior management team of a company. The main steps of the process are outlined below: • Hire an investment bank as an underwriter—the underwriters’ purpose is to negotiate ways to raise capital (by either debt or equity) and interface with the public. (In JetBlue’s case, the underwriter was Morgan Stanley.) • Begin to negotiate with the underwriters about all the required information that will be contained in the underwriting agreement. This information includes the amount of capital the company wants to raise, types of securities that will be issued...
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...ECFS895 Private Equity Investment AFC Term 1 CBD 2015 Dept of Applied Finance and Actuarial Studies Contents General Information Learning Outcomes General Assessment Information Assessment Tasks Delivery and Resources Unit Schedule Learning and Teaching Activities Policies and Procedures Graduate Capabilities Changes from Previous Offering Important Notice Standards Required to Complete the Unit Satisfactorily 2 2 3 3 7 8 10 10 12 15 15 15 Disclaimer Macquarie University has taken all reasonable measures to ensure the information in this publication is accurate and up-to-date. However, the information may change or become out-dated as a result of change in University policies, procedures or rules. The University reserves the right to make changes to any information in this publication without notice. Users of this publication are advised to check the website version of this publication [or the relevant faculty or department] before acting on any information in this publication. http://unitguides.mq.edu.au/unit_offerings/52041/unit_guide/print 1 Unit guide ECFS895 Private Equity Investment General Information Unit convenor and teaching staff Lecturer (Sydney/Melbourne) Stephane Chatonsky stephane.chatonsky@mq.edu.au Contact via Email Unit Convenor / Lecturer Roger Casey roger.casey@mq.edu.au Contact via Email Credit points 2 Prerequisites (Admission to MAppFin or PGCertAppFin or GradDipAppFin) and ECFS866 Corequisites Co-badged status Unit description This...
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...MKT 111 EXAM 1 I) Chapter 1: Introduction to Marketing A) What is marketing? (pg 5) 1) Marketing is managing profitable customer relationships 2) The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return B) Understand core marketing concepts (pgs 6-8) 3) Customer needs (a) Needs: States of felt deprivation (b) Wants: The form human needs take as they are shaped by culture and individual personalities (c) Demands: Human wants that are backed up by buying power 4) Offerings (d) Market offerings: Some combination of products, services, information, or experiences offered to a market to satisfy need or want 5) Customer value and satisfaction 6) Exchange (e) Exchange: The act of obtaining a desired object from someone by offering something in return C) Understand customer relationship management (pg 13-14) 7) Customer (perceived) value (f) The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those competing offers 8) Customer satisfaction (g) The extent to which a product’s perceived performance matches a buyer’s expectations D) Capturing value from customers (slides) 9) Customer lifetime value, loyalty etc ...
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...ST-1 pg 293 Proxy- A document giving one person the authority to act for another typically the power to vote shares of a common stock. Proxy fight- An attempt by a person or group to gain control of a firm by getting its stockholders to grant that person or group the authority to vote its shares to replace the current management Takeover- An action whereby a person or group succeeds in ousting a firms management and taking control of the company. Preemptive Right- A provision in the corporate charter or bylaws that gives common stockholders the right to purchase on a pro rata basis new issues of common stock Classified Stock- Common stock that is given a special designation such as class a or class b to meet special needs of the company, Founders Shares- Stock owned by the firms founders that has sole voting rights but restricted dividends for a specific number of years. Marginal Investor- A representative investor whose actions reflect the beliefs of those people who are currently trading a stock. It is the marginal investor who determines a stocks price. Marker Price P0- The price at which a stock sells in the market. Growth Rate- The expected rate of growth in dividends per share. Required rate of return Rs- The minimum rate of return on a common stock that a stockholder considers acceptable. Expected rate of return Rs- The rate of return on a common stock that a stockholder expects to receive in the future. Actual (realized) rate of return Rs- The rate of return...
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...MKT 111 EXAM 1 I) Chapter 1: Introduction to Marketing A) What is marketing? (pg 5) 1) Marketing is managing profitable customer relationships 2) The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return B) Understand core marketing concepts (pgs 6-8) 3) Customer needs (a) Needs: States of felt deprivation (b) Wants: The form human needs take as they are shaped by culture and individual personalities (c) Demands: Human wants that are backed up by buying power 4) Offerings (d) Market offerings: Some combination of products, services, information, or experiences offered to a market to satisfy need or want 5) Customer value and satisfaction 6) Exchange (e) Exchange: The act of obtaining a desired object from someone by offering something in return C) Understand customer relationship management (pg 13-14) 7) Customer (perceived) value (f) The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those competing offers 8) Customer satisfaction (g) The extent to which a product’s perceived performance matches a buyer’s expectations D) Capturing value from customers (slides) 9) Customer lifetime value, loyalty etc ...
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...(SBER) Assessment Corporate Users April 2015 Introduction The Sustainable Business and Enterprise Roundtable (SBER) service provides an annual, confidential qualitative Diagnostic and Assessment to benchmark Member-Clients against their peers and recommend areas for improvement. This Assessment Report details benchmarks and performance in five component areas, which are rolled up to a weighted SBER Index (Figure 1). The component and index scores are updated with information sourced from participating Member companies on an ongoing basis. This report details best practices for the Corporate Users, comparing PG&E with similar businesses within the SBER. The members of this cohort have been evaluated in five components—Vision and Governance, Strategy, Guidance, Implementation, and Reporting Results—over the past two calendar years. Each component constitutes a weighted portion of the SBER Index score (Figure 2). Members are qualitatively benchmarked by their quartile of performance in each of the five component areas (Figure 3), based on the methodology described in the Appendix. Each SBER Component Rating compares the company against the averages for all Member companies for the current calendar year. The relevant Assessment and Diagnostic questions in each component are detailed below each component score graph. The scoring methodology and a list of participating companies are detailed in the Appendix. Based on an initial assessment, PG&E’s current SBER...
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...requires that the MD&A present the most important and relevant information to the investors or anyone who reads the MD&A. The SEC emphasizes that the MD&A shouldn’t be a recitation of financial statements in narrative form; it should come from management in terms that everyone can easily understand. The SEC emphasizes the following: overall presentation and focus of MD&A, an emphasis on analysis of financial information, known material trends and uncertainties, key performance indicators, including non-financial indicators, liquidity and capital resources, and critical accounting estimates. [2] Part II - 3. What types of investments does the company hold? According to the Annual Report, amazon invests in money market funds, corporate debt securities, U.S. government agency securities, asset backed securities, and foreign government and agency securities. Amazon generally invests their excess cash in investment grade short- to intermediate-term fixed income securities and AAA-rated money market funds. Such investments are included in “Cash and cash equivalents,” or “Marketable securities” on the accompanying consolidated balance sheets, classified as available-for-sale, and reported at fair...
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...Introduction In recent decades, the global economy has undergone a rapid transformation, from an economy driven by “traditional hard assets- plants, warehouses and the like”, to an economy driven by patents, software, intellectual property, and brands. These items fall into a category that has become hugely important in the world of financial reporting, “intangible assets”. Increasingly, the value of a firm is derived not from its tangible assets such as stock, property, plant and equipment but by its knowledge capital, its employees, even by its business processes. As Baruch Lev notes in 2001: “Pfizer’s value comes from its discovery activities (drug development, patents, trademarks), and from an unusually effective sale force (human capital, training), and not from its lab equipment or pill production facilities, Wal-Mart’s incredible competitiveness derives from unique organizational processes, such as those shifting inventory management to suppliers, rather than from bricks and mortar.” As the new intangible economy has continued to grow, so has the concern that the current system of financial reporting is incapable of providing the information its users require to assign fair value to a firm. Much research has been conducted analyzing the problems inherent in the current state of financial reporting and many solutions have been proposed. As this paper intends to display, the level of information provided to the users of financial reports regarding intangibles acquired...
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...ERIN BROCKOVICH (2000) Cast: Julia Roberts, Albert Finney. Directed by: Steven Soderbirgh Screenplay: Susannah Grant The motion picture titled ‘Erin Brockovich’ is written by Susannah Grant and directed by Steven Soderbirgh and is based on true events between the years 1993 and 1996. Released in the year 2000, this Hollywood movie revolves around two characters: Erin Brockovich an American environmentalist and paralegal official. The other character is the US based power and gas firm ‘Pacific Gas and Electric Company’ (PG & E) which is responsible for providing gas and electricity utilities to almost 2/3rds of the northern Californian population. The events surrounding a much publicized and broadcasted case involving PG & E and residents of Hinkley, California expose a plethora of business and general ethical issues that form a sumptuous academic feast for any business student. Before exploring the central characters of this story and inspecting the varied moral and ethical positions adopted by them in the movie, we must engage ourselves in creating a brief background study of the people and the institutions that play a pivotal role in this intriguing drama of business ethics and it’s relation with human psyche and actions. Main Characters: a. Erin ‘Patty’ Brockovich: Erin is a thirty three years old - twice divorced single mother of 3 children by the name of Matthew, Katy and Beth who age 8 years, 6 years and 9 months respectively in the beginning...
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...depict the potential increase in firm value (i.e. the increase in shareholder wealth). * The time value of money is taken into account. * All expected cash flows are taken into account. * The method is relatively straightforward and simple to calculate. However this method does come with disadvantages. For example (Bester, nd.): * Outcomes are depicted in Rand values and not percentages, thus relative comparison may prove difficult. * NPV requires a predetermined discount rate (cost of capital) which may be difficult to calculate. “Academics have long promoted the use of NPV” (Correia & Cramer, 2008, pg 33). Net Present Value (NPV) is one of the most straight-forward and common valuation methods in capital budgeting. Stated simply, NPV can be defined as a “project’s net contribution to wealth” (Brealey, Myers & Allen, 2008, pg 998), and could also be observed as “an estimate of the change in a firm’s value caused by an investment in a particular project” (Chatfield & Dalbor, 2005, pg10). The formula for NPV is as follows: (Hillier, Grinblatt and Titman, 2008). Stated in words, NPV = Present Value of cash flows – Investment (Brealey et al, 2008). NPV incorporates the time value of money into its calculation by discounting future expected...
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...Daniel Sebagh Dr. Armiger Response paper #2 4/26/12 Oil Crisis in the 1970’s The Oil Crisis of the 1970’s was a major period in American history, when a number of political, global and social events came together to create a ‘perfect storm’. The Seventies was an era filled with people seeking self-fulfillment (The ‘Me’ Decade), where the nation was growing at a fast pace. People, during this time, concentrated on their own leisure and happiness. Behind the narcissism and selfishness of many people’s attitudes, an oil crisis struck America which largely impacted the automobile industry and led to a rise in gas prices. The combination of stagnant growth and price inflation during this era raises many issues, while many attempts to end the crisis, such as Jimmy Carter’s Energy plan, substantially made it worse. These problems caused Americans to focus more on economic issues versus social issues. The “Me Decade,” a term coined by novelist Tom Wolfe, was a concept of the Seventies- “an era of narcissism, selfishness, personal rather than political awareness… The ‘70’s was the decade in which people put emphasis on the skin, on the surface, rather than on the roof of things… It was the decade in which image became preeminent because nothing deeper was going on (Schulman, 145).” It described the new American self-awareness and the collective retreat from history, community and human reciprocity. Compared to the 1960’s, Americans in the 1970’s were self-absorbed and passive;...
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...(1) The article on global accounting convergence by Hail, Leuz, and Wysocki (Part 1) examines several factors to consider regarding the potential adoption of IFRS by the United States. Overall, based on the article, do you think the adoption of IFRS by the United States is a net gain for the US marketplace? Give three reasons to support your position (be specific). Please include specifically what groups will be affected and why IFRS would be better or worse than US GAAP. 1 2 I believe that adopting the IFRS would be a net gain for the United States. Many countries have already moved to adopt these standards. As of 2011, over 120 countries were using IFRS as their main accounting standard system. IFRS has the potential to facilitate cross-border comparability, increase reporting transparency, decrease information costs, reduce information asymmetry and thereby increase the liquidity, competition and efficiency of markets (Choi & Meek, 2005). * By adopting the IFRS, the country's businesses would be presenting financial statements on the same foundation that foreign companies would. This would make comparison between global competition much easier. It would also make it easier on the companies based out of the U.S. that do business globally, because now they would only have to present their financial statements based on one set of standards, rather than multiple sets. Currently, the U.S. operates off of GAAP, so those businesses with subsidiaries overseas have...
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