SOLUTIONS TO CASE STUDIES CHAPTER 13 Case Study 13.1 Telstra opts for David Thodey as replacement for Sol Trujillo 1. Why would the Telstra board appoint an internal candidate to the position of chief executive‚ rather than an external candidate? This question is a good opportunity for students to reflect on what constitutes ‘expertise’. On the surface of the facts‚ David Thodey may seem like an unusual choice given that his proposed management changes are
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shares? Justify your valuation using both discounted cash flow and comparables (market multiples) analysis. 3. At what price would you recommend that Rosetta Stone shares be sold? Rosetta Stone: Pricing the 2009 IPO Please address the following questions in your write-up. 1. What are the advantages and disadvantages of Rosetta Stone going public? 2. What do you think the current market price is for Rosetta Stone shares? Justify your valuation using both discounted cash flow and comparables (market
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attempting to determine the valuation of LinkedIn it helps to understand some of the issues involved. The most accurate way to value a stock’s price is using discounted cash flows. The problem with this approach is that it is nearly impossible to predict with any accuracy what the long-term cash flows are for a given company; especially a company that is young or that might be using an innovative and new business model. Additionally‚ knowing what long-term cash flows look like requires knowledge
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oils‚ which produces manufactured petroleum products‚ such as gasoline and diesel fuels. NewGrade upgrade refineries have earned the company a cash balance of $150 million to date (Ivey‚ 2009). In addition to the data provided limited information is known about the private company’s balance sheet. A) Describe the various constraints of the valuation faced by NewGrade: NewGrade Energy’s current owners Crown Investment Corporation’s (CIC)‚ Chief Financial Officer (CFO) Blair Swystun‚ is
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restaurant chain that had recently gone through a foodborne illness outbreak‚ as December of 2016. In order to value Chipotle‚ the author has analyzed the strategic outlook and the financial performance of the company‚ as well as conducted both the discounted cash flow analysis and the comparable company analysis. In respect with the overall fast-casual industry in which Chipotle competes‚ although the market competition is intensifying‚ it is expected that this industry will continue to grow in the U.S
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updated version. 4 Class Materials • Class notes – Self contained: will do a brief review of concepts from Corporate Finance‚ having taken Valuation is useful but not required – Handouts in class‚ slides uploaded on NYU Classes – To see what’s next‚ check NYU Classes • No Required texts: – Useful textbooks for background reading • Investment Valuation 3rd Ed. by Damodaran • Brealey‚ Myers Allen • Ross Westerfield Jaffe – Articles and cases 5 Class Materials • HBS cases for detailed analysis
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used in the hotel valuation process‚ the sales comparison approach‚ and the cost approach. The income approach deals with either a Cap Rate or discounted cash flows. This approach is the preferred approach to valuation as it most closely reflects the economic analysis employed by typical buyers and sellers. The sales comparison approach views no sale is the same and too many adjustments to variables need to be made to make the approach reliable. The cost approach basis for valuation does not consider
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1872 Khakis ‘R Us Valuation MBA Investment Bankers LLC January‚ 2014 Executive Summary • Evaluation of NYC Capital Offer — Comparable Companies Analysis $24.64-$32.90 — Precedent Transaction Analysis $21.99-$30.43 — Discounted Cash Flow Analysis $25.03-$33.74 • Recommendations — Counteroffer $20/share + Earnout of 75% EBITDA over 3 years $25.18-$30.03 — Defensive Strategy Shareholder Rights Plan + Buyback — One Year From Now About Boots‚ Valuation Range Khakis ‘R Us
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do incremental cash flows differ from total project cash flows? What is the difference between foreign project cash flows and parent cash flows? How does APV analysis differ from NPV analysis? How is the capital budgeting analysis adjusted for the additional economic and political risks? What is real option analysis? Complexities of Capital Budgeting for a Foreign Project Several factors make budgeting for a foreign project more complex Parent cash flows must be distinguished
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Valuation: Basics! Aswath Damodaran Aswath Damodaran! 1! Approaches to Valuation! Intrinsic valuation‚ relates the value of an asset to the present value of expected future cashflows on that asset. In its most common form‚ this takes the form of a discounted cash flow valuation. Relative valuation‚ estimates the value of an asset by looking at the pricing of ’comparable’ assets relative to a common variable like earnings‚ cashflows‚ book value or sales. Contingent
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