“expected value.” Towards calculating #2‚ there is also information given on CPP synergies on page 3 of the case. Common to all the valuations‚ you have to calculate an unlevered cost of equity. Use the information on one publicly traded peer company‚ Wackenhut‚ in Exhibit 4 to estimate the unlevered cost of equity for Pinkerton cash flows. For the continuing value‚ use the free cash flow growth perpetuity model. Assume a perpetuity growth rate of 5% after 1992. For financing strategy
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BERKSHIRE HATHAWAY PURCHASES GEICO WARREN BUFFET Executive Summary Berkshire Hathaway has made a bid for the remaining portion of GEICO stock. This report reviews the offer initiated by Warren Buffett. The details of this report include: • Valuation of GEICO stock. The $70 offer made by Warren Buffett and Berkshire Hathaway includes a 26% premium over the current GEICO stock price of $55.75. This report attempts to determine a range of appropriate stock prices for GEICO. Using the
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calculated the ra to be 14.8% Estimating the cost of debt We estimated the cost of debt using the average interest expense out of total debt. Pre-bid: interest expense / (notes payable + current portion of long-term debt + long-term debt) = 10.3% Management Group: interest expense / (principal debt payments + total year-end book value of debt) = 12.5% KKR: interest expense / (principal debt payments + total year-end book value of debt) = 12.8% As we can see‚ the cost of debt is higher in both Management
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1.0 Introduction Letter of credit (L/C) can be defined as an “undertaking” whereby the buyer’s bank is committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under some agreed conditions. Since the agreed conditions include‚ amongst other things‚ the presentation of some specified documents‚ the letter of credit is called Documentary Letter of Credit or‚ in short‚ Documentary Credit. The Uniform Customs & Practice for Documentary Credit (UCPDC) published
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payment interval Implies that the amount regularly paid to discharge an obligation is of equal size Note: in finding the size of the periodic payment‚ one of the most important factors to consider is whether the loan is due now or later The concept of amortization is applicable if the loan or financial obligation due now Finding the Size of Each Payment The size of the periodic payment to settle a debt is highly dependent on the time the payment is made. For ordinary annuity ? ?=? 1 − 1
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Valuation of equity Example based on dividend discount model : Vardhman limited’s earnings and dividends have been growing at a rate of 18% per annum. This growth rate is expected to continue for 4 years. After that the growth rate will fall to 12 % for the next 4 years. Thereafter‚ the growth rate is expected to be 6 % forever. If the last dividend per share was RS. 2.00 And the investor’s required rate of return on verdhman’s equity is 15% what is the intrinsic value per share? Step 1: the
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Jide Wintoki From: Richard Smith‚ Scott Mitchell‚ Zack Gregory Re: Mercury Athletic Acquisition Based on our analysis of Mr. Liedtke’s base case projections for a potential acquisition of Mercury Athletic‚ we have concluded that this is a positive net present value project‚ and that AGI should proceed with the acquisition. Under Mr. Liedtke’s operating assumptions‚ we calculate the value of Mercury’s discounted cash flows to be $624.446 million‚ and the acquisition price to be $156.643 million‚ yielding
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for in its calculation. Answer the next 4 questions using the information in the following table. You are considering the purchase of a $1‚000 par value Treasury Bill and observe the following quotes for T-Bills in the market: Ignore transaction costs. Time to Maturity (days) Bid % Asked % 60 1.64 1.55 88 1.63 1.54 116 1.62 1.53 144 1.61 1.52 4. The ask price of a T-bill in the secondary market is A. the price at which the dealer in T-bills is willing to sell the bill. B
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Terminal Value 691.796 *13.599/(WACC-GrowthRate) Summe 705.355 Present Value 4.181 4.238 7.525 8.467 528.908 *Firm Free CF/ (1+WACC)^t DCF 553.318 Current Risk Free Rate 4‚15% Market Risk Premium 6‚50% CAPM Cost of Capital 8‚75% Cost of Dept 6‚00% Discount Rate 14‚75% βA (βU * (1+D/E) 94‚67% Tax Rate 40% D/V 25% E/V = (1-D/V) 75% WACC 7‚46 Trading Multiples Source Average Sales Multiple 1‚35 Exh 8 Average EBITDA Multiple 9‚75 Exh 8 Net Sales Source Value
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Subjective well being is based on a person’s experiences in their life satisfactions and a person’s emotional experiences. Subjective well being reflects the way a person views the quality of life from the positive or negative emotional experience. During the time span of a person’s life‚ many people range from experiencing positive to negative life experiences. Depending on how much of the positive experiences someone goes through‚ that would make their overall subjective well being status very
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