FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Exercise 2. Some DCF Methods
BLAZER TELECOM s has perpetual earnings before interest and taxes of $400, the corporate tax rate is 40%. BLAZER uses a debt-to-equity rat
FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Assignment 1. CAPM and WACC in valuation
BLAZER TELECOM s has perpetual earnings before interest and taxes of $400, the corporate tax rate is 40%. BLAZER uses a debt-t
Financial Instruments
Money Market vs. Capital Market Maturity of 1 year or less vs. maturity of more than 1 year at time of issue Money Market Instruments T-bills Currently 1-month, 3-month and 6-months CDs Notes that banks write on themselves. Unde
FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Assignment 5. HLTs
BLAZER TELECOM's perpetual earnings before interest and taxes is $400, the corporate tax rate is 40%. To help finance the project BLAZER will use a
The Capital Asset Pricing Model
BKM Chapter 9
Assumptions of the CAPM Proof of the CAPM Intuition behind the CAPM The Security Market Line
Introduction Markowitz portfolio theory provides us with tools to select optimal portfolios given expected r
FINC 727: Corporate transactions and business valuation
Professor Robert Hansen
Exercise 3. Growth models: two-part exercise. Please complete both parts. I. Blazer s Growth BLAZER TELECOM s has perpetual earnings before interest and taxes of $400 f
The Boeing 7E7 Case Analysis
Group Member: Yiwei Fang, QinYing Yan, YeChi Zhang, LuXin Wang and Kai Xiao
1) Why is Boeing contemplating the launch of the 7E7 project? Is this a good time to do
so?
<1> Why is Boeing contemplating the launch of the 7E7 proj
1
Arundel Partners: The
sequel project
What is the big idea?
2
The idea is buy sequel rights from
movie/production houses
Key part is to buy the right to produce the sequel
movie even before the first part is produced.
2
Time Line
3
3
Timing is important
1
Acova Radiateurs
Substantive issues
2
Situation of valuing highly levered equity claims on operating assets.
The equity holders have an option here.
However it is complex option.
Every time the interest or principal payment comes due the equity holders
Credit Derivatives
Credit Derivatives Basics
2
Credit derivatives are instruments where the payoff
depends on the credit quality of a company or other
reference entity
Credit derivatives can provide protection against
credit risk exposure
Example - banks
To calculate the WACC of 7e7 project, we will use the following formula:
WACC=(1-t)wd kd+we ke
And the following steps will find out all the parameters in this formula.
First, as the case shows that the debt/equity ratio is 52.5%, we can calculate the
wd=
RFR
beta
risk premium
re
t
rd
d/v
e/v
wacc
g
shares
FCFF
time
discount factor
PV
value of the firm
debt
cash
value of the equity
price before synergies
synergies
price after synergies
4.92%
1.06
5.07%
10.294200%
26%
35%
6.10%
49.40%
50.60%
7.438781% 8.500
1
Valuing Equity Cash Flows
Substantive issues
2
Situation of valuing highly levered equity claims on operating assets.
The equity holders have an option here.
However it is complex option.
Every time the interest or principal payment comes due the equity
1
Valuation: Options
What are Options
An option gives the holder the right, but not the obligation,
to buy or sell a given quantity of an asset on (or before) a
given date, at prices agreed upon today.
Exercising the Option
Strike Price or Exercise Price
Practical Applications of
Corporate Finance
Presentation to Finance 321
University of Illinois at Urbana-Champaign
March 27, 2007
Todays Discussion
Case study: A-Rod Signing the
Best Player in Baseball
My career in finance: a perspective
Todays Discussion
1
Kohler Co.
Valuation method
2
What valuation method do we use?
Discounted Cash flow method?
Comparable companies (multiples)
Need to be cognizant of Kohler being a private company
2
Discounted Cash Flow
3
Following are the steps
Estimate the companys co
Arundel Partners Case Report
Kai Xiao, Qinying Yan, Yiwei Fang, Luxin Wang, Huachi Zhang
1. The idea behind sequel project was to create an investment group, Arundel Partners, which would
purchase the sequel rights associated with films produced by one or
Team Member: Kai Xiao, Qinying Yan, Yiwei Fang, Luxin Wang and Huachi Zhang
Part 1: Andrew Liveris, the CEO of Dow, decided to transform the company to a producer of high-value
specialty chemicals and advanced material. Acquiring Rohm and Haas is the core
Acova Case Report
1. Our team believe Acova is a good LBO candidate. First, Acova has stable historical and projected
sales growth with more than 10% growth rate each year. Second, Acova is one of the leading
companies in the radiator market, especially i
AirThread Case Report
Kai Xiao, Yiwei Fang, Huachi Zhang, Luxin Wang, Qinying Yan
1. Due to Debt-to-Equity changed over time, we decided to use APV in order to value
AirThread instead of WACC methodological approach.
(1) Cash flows from 2008 to 2012
1 1t
Instructions
WARNING: DO NOT RENAME THE SPREADSHEET. ALWAYS NAME IT "Bid.xls".
OTHERWISE THE MACRO WILL NOT RUN AND EXPLODE ON YOU!
OVERVIEW
This workbook allows you to construct a decision analysis simulation of the Antamina mine described in
the "Biddin
Ejercicio 1
Cantidad
Microbuses
Equivalente a autobuses
Precio por autobus
Precio total por 5 autobuses
Precio de venta microbus
10
5
Q
343,000
$ 1,715,000 Equivalente a la inversin inicial
$
40,000
Ao 0
Inversin Inicial
Flujo
$
$
Ao 3
Ao 4
Ao 5
1,715,000
1
Bidding for Antamina
The Project
2
State-owned copper and zinc mine in Peru
Privatization in 1996: call for bids. Small upfront
payment + promise to develop
Prelimanry study to evaluate the deposits
Develop the mine after two years if the study
suggeste
WAL- MART Stores Inc.
WMT/ NYSE
Investment Rating:
UNDERVALUED- BUY
Analysts:
Milena Dragovic
Xinyan Sun
Wanyue Jiang
Yuan Ren
[WAL-MARTS BEST IS YET TO
COME]
According to our analysis, we believe that WAL-MART Stores Inc. is
undervalued and that the best
After two years development, potential customers were unwilling to pay a premium
for a faster ride. Thus overdue to develop a new one to pull it out of its financial
slump and regain sales lost to Airbus. Meanwhile, Boeing is suffering from half
productio