081051 208310 5 133 c Sales fro firm 0 Brand name value 378 133

081051 208310 5 133 c sales fro firm 0 brand name

This preview shows page 115 - 124 out of 136 pages.

Value to Sales ratio = 0.08*1.05*(1-.2083)/(.10.-5) = 1.33 c. Sales fro firm = 5000 *2.5 = $12,500 Brand name value = (3.78-1.33) (12500) = $30,624 Problem 3 a. Value of Existing product = 120 million (PVA, 8 years, 11%) = $617.53 b. Net present value of project = -2500 + 250 (PVA, 16 years, 11%) = c. Value of the patent S = 1844.79 K = 2500 t = 16 years y = 1/16 = 0.0625 Variance = 0.10 Value of the patent = 1844.79 e(-.0625*16) (.6368) - 2500 e (-.06*16) (.1841) = Problem 4 Column1 TriMedia Leppard Combined firm Cost of Equity 9.60% 10.400% 10.87% Cost of Debt 4.20% 0.042 4.50% Debt Ratio 10% 10% 30% Cost of Capital 9.06% 9.78% 8.96% Unlevered beta for TriMedia= 0.84375 Unlevered beta for Leppard = 1.03125 Weighted Unlevered Beta = 0.84375(1/3) + 1.03125(2/3) = 0.96875 Levered beta at 30% debt ratio = 1.217857143 FCFF next year for TriMedia : 1000 = X/(.0906-.05); Solve for X FCFF next year = $40.60
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FCFF next year for Leppard : 2000 = X/(.0978-.05) FCFF next year = $95.60 Value of combined firm =(40.6+ 95.6)/(.0898-.05) = $3,439.39 Valeu of combined firm without synergy = $3,000.00 Value of Synergy = $439.39
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0 + 4100 + 5000 + 3000 = 13100 69.16% -$655.21 $256.00
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Problem 1 1 2 3 4 (Terminal ye EBIT $100.00 $125.00 $156.25 $164.06 Net Cap Ex $ 30.00 $ 37.50 $ 46.50 $ 32.00 Total Working Capital $ 60.00 $ 70.00 $ 82.00 $ 88.00 Cost of Equity 12% 11% 11% 10% Pre-tax Cost of borrowing 8.00% 7.50% 7% 7% Debt Ratio 25% 25% 25% 25% Cash Flows for next 3 years 1 2 3 Terminal year Tax rate 0 16% 40% 40% EBIT(1-t) 100 105 93.75 98.436 Net Cap Ex $ 30.00 $ 37.50 $ 46.50 $ 32.00 chg WC $ 8.00 $ 10.00 $ 12.00 $ 6.00 FCFF $ 62.00 $ 57.50 $ 35.25 $ 60.44 Cost of Equity 12% 11% 11% 10% AT Cost of Debt 8% 6% 4% 4% Cost of Capital 11.00% 9.83% 9.30% 8.55% Terminal Value = 60.44/(.0855-.05) = $ 1,702 Value of firm = 62/1.11+77.50/(1.11*1.0983)+35.25/(1.11*1.0983*1.093)+1702/(1.11*1.09833 Problem 2 1 2 3 4 AHP $100 $120 $144 $173 HA $60 $69 $79 $91 Combined firm (with synergy) $172 $203 $239 $282 CF from synergy $12 $14 $16 $18 Value of AHP= $ 2,894.82 Value of HA = $ 1,542.37 Value of Combined firm= $ 4,745.66 Value of Synergy = $ 308.47 Problem 3 PE Ratio for the industry = 20 ! Based upon valuation of 2 billion and net PEG Ratio for the industry = 2 PEG Ratio for Sysoft = 2.5 ! 1.25 times the industry average PEG ratio PE ratio for Sysoft = 37.5 Value of Sysoft Equity= 3750 Problem 4 a. Value of firm = $ 15,000 PV of Cash flows from developed rese $ 3,890 Value of undeveloped reserves = $ 11,110 a. Increase b. Effect uncertain. Price increase is good, but variance drop is bad. c. Effect uncertain. Increase in interest rates increases the value of the call, but the PV of oil wil d. Decrease Problem 5 a.ROC = 0.075 ! ROC = After tax margin* Capital turnove r Expected Growth Rate = 0.045 ! ROC * Reinvestment Rate Value of firm 2280 ! = 300 (1-.6)(1.045)/(.10-.045)
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b. Restructured Return on Capital = 0.125 New growth rate = 0.05 Value of firm (restructured) = 4725 ! = 300 (1-.4)(1.05)/(.09-.05) Change in firm value = 2445 If you assume that the improvement in margins increases oprating income from existing assets Restructured Return on Capital = 0.125 New growth rate = 0.05 Value of firm (restructured) = 7875 ! = 500 (1-.4)(1.05)/(.09-.05) Change in firm value = 5595
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ear) 3*1.093) = $ 1,407.10 income of 100 o ll decrease as well (reducing S) ratio = .03*2.5
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s,
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Problem 1 Novotel VideoGraf ROC 9.60% 0.1125 Reinv Rate 0.520833333 0.444444444 FCFF 46 150 Cost of Capital 9.52% 9.52% Firm Value 1069.530558 3487.599646 $ 4,557.13 b. Value of Synergy New ROC = (450+160)*.6/((1000+2400)*.8) = 13.46% New Reinvestment Rate = 0.371584699 New Beta after restructuring = 0.9 New Cost of Equity = 0.1067 New Cost of Capital = 10.67% (0.75) + .08*0.6*.25 = 9.20% New Value = 5746.579417 Value of Synergy = 5747 - (1070+3488) = $ 1,189.45 Problem 2 Solve for the FCFF used by the analyst Value of firm prior to liquidity discount = 65/(1-.35) = 100 Cost of Capital used by analyst = 25% (.5) + 5% (.5) = 15% FCFF used by analyst : 100 = FCFF (1.05)/(.15 - .05) = $ 9.52 Cost of Equity for firm = 5% + 1.1 (6.3%) = 11.93% Cost of Capital for firm = 11.93% (.9) + 5% (.1) = 11.24% Firm Value = 9.52 (1.05)/(.1124 - .05) = $ 160.33 Problem 3 a. Talbot's: Low PE, High Growth, Low Risk, High Payout: Best of All Worlds
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