Which employees in the company should be compensated based on EVA? How would you design the incentive compensation formula for management? For example, would the formula use EVA or change in EVA as the principle variable? How much of total compensation should be subject to EVA performance? Assignment: Teams 1-8 should prepare the “Valmont Industries, Inc.” case for in-class discussion. No formal write-up is required. Wednesday – September 12 Case: "The O.M. Scott & Sons Company", Harvard Business School Case #9-209-102, Harvard College, Revised 02/84, 11 Pages. Starter How was Scott able to achieve its rapid growth from a local to a national company? Questions: What are the key factors in its success. How have the prices of Scott shares moved in the market? Why are they selling so high relative to earnings and dividends? Analyze the company's financial condition at the end of 1961. What are its prospects for future years? Project specific sales and profit figures for Scott for 1962 and 1963. What action, if any, should Scott take in relation to its internal operations? to its creditors? Assignment: Teams 9-16 should prepare the “O.M. Scott & Sons Company” case for in-class discussion. Nor formal write-up is required. __________
FIN 4414 – Syllabus – Sections 2761 & 2762 – 2012 Fall Term Page 13 of 32 Pages Video: Money, Power, and Wall Street - Hour 2 WEEK 5 Monday – September 17 Textbook: Chapter 10 - The Basics of Capital Budgeting: Evaluating Cash Flows • Web Extension: The Accounting Rate of Return • Web Extension: The Marginal Cost of Capital and the Optimal Capital Budget Chapter 11 - Cash Flow Estimation and Risk Analysis • Web Extension: Replacement Project Analysis • Web Extension: Certainty Equivalents and Risk-Adjusted Discount Rates Chapter 13 - Corporate Valuation, Value-Based Management, and Corporate Governance Assignment: Read the chapter and web extensions, and review the lecture slides (see Sakai, Week 5) before coming to class, so that you will be prepared for in-class exercises. Wednesday – September 19 Case: “Grand Metropolitan PLC”, Michael Levy, Robert F. Bruner, Philippe Demigne, Jean-Christophe Donek, Bertrand George, Darden Graduate School of Business Administration Case #UVA-F-1019, University of Virginia, Revised 03/98, 17 Pages. Case File: GRANDMET.XLS Starter What is your estimate of the pound-based weighted average cost of capital for Questions: Grand Metropolitan PLC? What discount rate(s) should GrandMet use for valuing new investments in its foods, retailing, and drink segments? Assume that the cash flows to be valued are in British pounds. What are the relevant dollar-based WACCs for the three segments and the GrandMet group? This question invites (expects) you to prepare dollar-based discount rates with which to value dollar cash flows for drinks, foods, and retailing, and for a portfolio of businesses like GrandMet.
- Fall '12
- Marketing, Harvard Business School, University of Virginia, Darden Graduate School of Business