Eskimo Pie Corporation

Eskimo Pie Corporation - Case #1- Eskimo Pie Corporation...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Case #1- Eskimo Pie Corporation
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background and Issues Eskimo pie sells ice-cream and related food products --earns revenues primarily through licensing, not a big manufacturer --key assets are brand name recognition --fragmented industry is consolidating, recent entry by large food cos. Why was Reynold’s selling Eskimo? Why did Eskimo management prefer the IPO to the Nestle offer? What criteria should Reynold’s use in deciding between selling Eskimo to another firm versus taking Eskimo public in an IPO?
Background image of page 2
Valuing Eskimo Pie To value Eskimo we need the following: (1) An appropriate discount rate (r) (2) An estimate of expected future cash flows (3) An estimate of the growth rate of future cash flows 1. What is the appropriate discount rate Later in the course we will examine methods of predicting what return investors demand to compensate them for bearing risk Using these methods and figures in the case on same industry firms, can calculate that investors expected approximately a 16.13% return, use this figure for r
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2. Expected future cash flows
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/17/2011 for the course ECON 101 taught by Professor Thompson during the Spring '11 term at Michigan State University.

Page1 / 9

Eskimo Pie Corporation - Case #1- Eskimo Pie Corporation...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online