Preview

Case 48 Questions 4 And 6

Satisfactory Essays
Open Document
Open Document
253 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Case 48 Questions 4 And 6
Case 48 questions 4 and 6
Conduct a multiples analysis to value Sun. What economic fundamentals are reflected in the multiples?
When conducting DCF with perpetuity the risk free rate is used as the growth rate to calculate TV of Sun microsystems. When conducting DCF with multiples we use the median of the debt to equity ratio of comparable companies to come up with the EBIT exit multiple to calculate the TV of sun Microsystems. Based on the information above one might think that using the multiples approach may be the correct way to value Sun Microsystems. However using multiples in this situation may be inaccurate to calculate TV for Sun Microsystems, because the companies being used to compare to Sun Microsystems are in a lot better off financially than Sun Microsystems such as Intel; thus overvaluing Sun Microsystems. If a competing bidder appears, how high a price should Oracle be willing to offer?
Based on the calculations made by forecasting the value of Sun Microsystems post absorption by oracle it was noticed that the price offered by Oracle to Sun Microsystems left a lot of room for negotiations assuming additional bidders appear. For both the DCF with Perpetuity TV and Multiples TV predict/portray a value surpassing the $9.50 offer. However the question on how high should Oracle be willing to offer will depend on Oracles management’s desire of return is. Theoretically the price offered by Oracle should remain from $9.50 PS to $14.45 PS.
See Excel Spread Sheet attached for calculations.
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    LAW 531 Final Exam Three Sets
    • 707 Words
    • 4 Pages

    LAW 531 Final Exam Three Sets

    6) Which of the following forms of alternative dispute resolution allows both parties to see the strengths and weaknesses of both sides of the case through the presentation of evidence?…

    • 707 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    FIN 515 Week 1 Homework Problems and Mini Case
    • 434 Words
    • 3 Pages

    FIN 515 Week 1 Homework Problems and Mini Case

    When you are choosing a major, do not simply think about money. You do not want a career in something that you find boring or uninteresting. A good choice is a major that will keep you interested fifty or more hours a week for the rest of your life. Explore your interests.…

    • 434 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Case 481 Case 7
    • 449 Words
    • 2 Pages

    Case 481 Case 7

    Still, the safety of these estimates can be compared with actual field measurements upon the return of the evacuees. However, the high degree of compliance with the stipulated limit in all the towns suggest that additional protection measures would be unnecessary, especially for the indoor residents. Overall, the relationship between the external ambient and individual doses was critical to predicting the annual doses per evacuee upon returning home to either of the areas under investigation. Generally, the doses for external exposure were much higher than those for internal exposure. Perhaps, the time of exposure in outdoor settings might have provided more realistic predictions of individual dose…

    • 449 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Session 25 Capital One Case Homework Questions student worksheet
    • 464 Words
    • 4 Pages

    Session 25 Capital One Case Homework Questions student worksheet

    2) Per the case study, what is one of their major strategies to grow profitably and compete? (list)…

    • 464 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Case 2 analysis
    • 264 Words
    • 2 Pages

    Case 2 analysis

    It will target a larger segment, 15% for fashionistas and 35% for planners and shoppers…

    • 264 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    MGT 498 Week 4 Discussion Questions 2
    • 606 Words
    • 4 Pages

    MGT 498 Week 4 Discussion Questions 2

    This document MGT 498 Week 4 Discussion Questions 2 shows solution of this task: "Looking back on the organization you used in your rely to discussion question number 4-1, what evaluation process did the organization use in developing their plans? What these evaluations correct for the situation they found themselves in? What controls did they put in place and what other controls should they consider?"…

    • 606 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    MGT 311 Week 3 Discussion Questions 1 Set 2
    • 377 Words
    • 2 Pages

    MGT 311 Week 3 Discussion Questions 1 Set 2

    This file MGT 311 Week 3 Discussion Questions 1 Set 2 shows solution on the following task "How can understanding stages of group development and group properties help employees in a work group function more effectively? As a manager, how would you help employees come to that understanding?"…

    • 377 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Better Essays

    Mccaw Cellular Communications: the at&T/Mccaw Merger Negotiation
    • 2457 Words
    • 10 Pages

    Mccaw Cellular Communications: the at&T/Mccaw Merger Negotiation

    SGMT 6050 – Case Write-­‐Up McCaw Cellular Communications: The AT&T/McCaw Merger Negotiation Armin Ezatagha Student Number ⏐ 205 576 707 eMail ⏐ aezatagha12@schulich.yorku.ca Schulich School of Business Tuesday, March 05, 2013 Current Telecommunications Ecosystem McCaw Cellular Communications (MCC), although positioned well with a new acquisition of LIN Broadcasting, find themselves in debt by $5 Billion could benefit from AT&T’s (ATT) brand name, data banks, marketing clout, and technical expertise.…

    • 2457 Words
    • 10 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    MGT 311 Week 3 Discussion Questions 2 Set 2
    • 379 Words
    • 2 Pages

    MGT 311 Week 3 Discussion Questions 2 Set 2

    This document MGT 311 Week 3 Discussion Questions 2 Set 2 shows solution on the following task "Although the optimal level of conflict can be functional, no conflict or too much conflict can be dysfunctional. What steps would you as a manager take to stimulate some degree of conflict when appropriate and reduce conflict when it is excessive?"…

    • 379 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Case 54 Questions
    • 1477 Words
    • 8 Pages

    Case 54 Questions

    Are book value or market value weights better for calculating the firm’s weighted average cost of capital?…

    • 1477 Words
    • 8 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Sun Microsystem Paper
    • 1039 Words
    • 5 Pages

    Sun Microsystem Paper

    A complete analysis was conducted on the financial statements and status of Sun Microsystems. After examining the research findings and analysis it is fair to say that evidence determines that Sun Microsystems finances has not been on a steady incline. In fact, it had definitely experienced some highs and lows in its return on investment and stockholders? In order to get a concise understanding of where problems are within the company’s operations the following factors were considered and examined: the annual percentage change in net income per common share diluted, net income/net revenues, the major income statement accounts to net revenues, return on stockholders? In order for Sun Microsystems to see a greater return in its bottom line assets it must consider an alternative approach of operating its organization. The following is a comprehensive view of the finances of Sun Microsystems from 1998-2001. Sun Microsystems has experienced significant fluctuations in performance…

    • 1039 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Law Test Questions
    • 5406 Words
    • 25 Pages

    Law Test Questions

    Tanisha is suing Fred, seeking money damages for the destruction that Fred caused to her lawn by continually driving across it with his pickup. Tanisha wants to have her attorney sit down with Fred in a conference room and ask him questions in person, so as to gather evidence, with a person representing the court present who will type down all that is said. What type of discovery is Tanisha seeking here?…

    • 5406 Words
    • 25 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    AT&T/McCaw Merger Negotiation.
    • 1239 Words
    • 6 Pages

    AT&T/McCaw Merger Negotiation.

    We performed a DCF Analysis for two scenarios: 1) assuming the purchase of the residual equity of LIN Broadcasting; and 2) assuming the sale of the residual equity of LIN Broadcasting (See Exhibits 1 & 2). The most critical assumptions impacting value were: 1) discount rate and 2) terminal growth rate. We relied on discount rates between 10.0% and 11.0% based on our analysis of the stand alone AT&T WACC (10.4%), the stand alone McCaw WACC (12.3%), and a blended calculation (11.1%). We chose growth rates between 3.0% and 4.0% as an estimate of the perpetual growth of FCF (implied Value/POP was approximately $300, high by industry standards) (See Exhibit 1). In addition to a DCF Analysis, we performed analyses of recent comparable transactions (See Exhibit 3) and recent premiums paid for publicly traded companies (See Exhibit 4). Results revealed that comparable transactions were executed at approximately $171 / POP and that recent deals were consummated on average at approximately 50% above twelve month average stock prices. In our opinion, the analysis of recent premiums paid is not reliable; as we are not able to evaluate the comparability of the included transactions (i.e. the contemplated transaction is large).…

    • 1239 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    BP Amoco Case Write Up
    • 636 Words
    • 3 Pages

    BP Amoco Case Write Up

    In DCF valuation (Chart 2), long-term growth rate is assumed to be 4%. Change in working capital is calculated as the average of 1997 and 1996 figure and is assumed to be constant for simplicity. Terminal value is valued at $69,398.1 million and NPV is $51,525 million. Stock price will be $37.07, indicating an exchange ratio at 0.46. This is a very conservative valuation as our DCF price is lower than Amoco’s current market price.…

    • 636 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Case Questions
    • 674 Words
    • 3 Pages

    Case Questions

    1. How is the policy portfolio of Harvard determined? What are the three major asset classes in the portfolio as of May 1999? Internally, by the HMC. The Board of the corp determined the Pol Port, but the mgmt. was permitted to make short-run decisions within certain constraints. HMC, considered 3 things when looking at asset classes: expected future rel returns, volatility of real returns, and the correlation of the real return on each asset class w/ the real return on all other asset classes.…

    • 674 Words
    • 3 Pages
    Satisfactory Essays
    Read More

Related Topics