MANEC453 HW 6 Fall 2010

MANEC453 HW 6 Fall 2010 - Historical data for the company...

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Eric Schneck Brigham Young University Department of Finance ManEc 453 Money, Banking and Financial Markets Problem set #6 Due: October 21, 2010 Questions 1. What is the Market Value of the Company your group is assigned to follow: Company: INTEL Market Value 107.1b What is the Enterprise Value of the same company? 88.68b What accounts for the difference? The difference between the market value and the enterprise value are debt and cash Debt is added in while cash is subtracted from the market value to get enterprise. 2. Suppose that you were going to make an offer to buy the small privately held company, Rockwell, Inc. Use the latest financial statements (June 30, 2010) to arrive at your offer price. Is this an equity valuation or an enterprise valuation?
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Unformatted text preview: Historical data for the company: 2007 2008 2009 Sales 1,115,580 1,276,043 1,346,179 Multple 2 2 2 Sales Valuation $2,231,159 $2,552,086 $2,692,359 <--- Price using Sales Valuation ( I would recommend this price over the EBITDA) EBITDA Jun 10 Jan - Jun 10 Annual Budget 2009 Net Income 48,173.00 87,138.00 80,786.00 Interest Expense 1665 10848 20821 Taxes 605 605 650 Deprecialtion Exp 1169 7016 19060 Amortization Exp. 270 1620 3972 EBITDA 51882 107227 125289 Multiple = 5 5 5 Market Value = 259,411 536,136 626,445 <--- Price using EBITDA (using June Because you have not taken out debt and added cash this is an equity valuation....
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