Date: Jan 30‚ 2013 Table of Contents 1. Introduction 1 2. Valuation Methodology 2 2.1. Discounted Cash Flow 2 2.2. Terminal Value 3 2.3. Weighted Average Cost of Capital 3 2.3.1 Cost of Equity 4 2.3.2 Cost of Debt 4 2.4. Free Cash Flow 4 3. Calculation of WACC for Kia motors 5 4. Calculation of Free Cash Flow for Kia motors 5 5. Estimation of the value for Kia motors at the end of 2011 6 6. Conclusion 6 References 7 Appendix -1 8
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Management is currently evaluating a proposal to build a plan that will manufacture lightweight trucks. Bauer plans to use a cost of capital of 12% to evaluate this project. Based on extensive research‚ it has prepared the following incremental free cash flow projections (in millions of dollars): | Year 0 | Year 1-9 | Year 10 | Revenues | | 100.0 | 100.0 | -Manufacturing expenses (other than depreciation) | | -35.0 | -35.0 | -Marketing expenses | | -10.0 | -10.0 | -Depreciation | | -15
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average) Inflation = 7.31% (10 year average) Gross margin = 37% Operating Cost = 22% Variable Management Fee = 5% With the above assumptions the FCF of the project and the Royalties that Walt Disney would get were calculated by projecting the Cash Flows till 25 years. The NPV of the project was found to be HKD1774million and the revenues to Walt Disney are HKD3834.51million. 2. How much does the attractiveness of the project vary according to different economic scenarios and financing arrangements
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to the case‚ there are stock price changes for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement. Also‚ the bid price for PacifiCorp is $9.4 billion. After knowing this announcement‚ Berkshire Hathaway’s Class A shares price went up and make them gained in market value $2.17 billion. In Berkshire and other investors’ point of view‚ After Berkshire takeover PacifiCorp‚ it might have a good development and future so that the stock price went up. Berkshire believed
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Using Discounted cash flow method 4 Dividend Growth Model 7 Comparable Companies Analysis 8 Valuation Summary 9 Justifying the share price of $ 55‚400 10 Defending $270‚000 as share value 10 Final advice to Herbert Kohler 10 EXECUTIVE SUMMARY In May 1998‚ Kohler Co. offered a recapitalization plan to buy-out minority shareholders and hence become a 100% family owned business. But the offered price of $55‚400 was contested by the dissenting shareholders who considered the share price to be
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I. Executive Summary In May of 2000‚ Yeats Valves chairman and CEO‚ Bill Yeats‚ met with his consultant and fellow board member‚ Kate Porter‚ to discuss the final negotiations regarding the acquisition of Yeats Valves by TSE International Corporation. Although the social terms of the merger had been discussed‚ no specific details had been settled. Organized in 1980 for engineering and developmental work on specialty valves and heat exchangers‚ Yeats Valves and Controls Inc (YVC) had a reputation
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step to publish the IPO. Following this‚ it will discuss the disadvantage and advantage to publish the IPO and use the financial data to evaluate the price is suit for the first publish. In this case‚ there are three different share valuation methods: P/E multiple (comparison pricing); EBIT multiple (comparison pricing) and discounted free cash flow (fundamental pricing). Analysis the advantage and disadvantage of the IPO JetBlue has been successful to duplicate Southwest’s strategy which provides
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approach to value creation‚ have been developed and marketed by investment banking firms and consulting firms. In this paper‚ we begin with a generic discounted cash flow model‚ and consider the ways in which value can be created or destroyed in a firm. We then look at two of the most widely used value enhancement measures‚ Economic Value Added and Cash Flow Return on Investment‚ and consider where these approaches yield similar results to those obtained from traditional valuation models‚ and where (and
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need to know the financial market standard theory which is Discounted Cash flows Model (DFC). Price or asset value need take expected future cash flow discount gives a present value. The discount rate is the risk-free rate plus risk medium. When the risk is high‚ the asset value will lower. We apply this DFC theory to the behaviour of investors in Greek sovereign debt. According to the DFC‚ when Greek is facing the sovereign debt‚ the price of the government bond should be lower because it is high
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of an asset’s fair value less costs to sell and its value in use 5 Definitions Fair value : – The amount obtainable from the sale of an asset in a bargained transaction between knowledgeable‚ willing parties Value in use : – The discounted
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