Methods of Corporate Valuation Prof. Ian H. Giddy‚ New York University | What is my company worth? What are the ratios used by analysts to determine whether a stock is undervalued or overvalued? How valid is the discounted present value approach? How can one value a company as a going concern‚ and how does this change in the context of a potential acquisition‚ or when the company faces financial stress? Finding a value for a company is no easy task -- but doing so is an essential component
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was still able to deliver good performance despite the circumstances. It offered the lowest cost per available-seat-mile of any major US airlines. In order to support JetBlue’s growth plan and offset portfolio losses by its venture-capital investors‚ JetBlue wished to raise capital through initial public offering (IPO). The purpose of this report is to determine the appropriate JetBlue’s IPO price given the available data. The report begins with the issue of underpricing‚ explaining the importance
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FINA 5210 Problem Set 1 (Group 305) Problem 1 (a) WpC=[E(rp)-rf] ÷Aσp2 =6%÷2.5×(20%)2 =60% WfC=100% - 60% = 40% (b) Expected return of Complete portfolio is: rCEc= WpC×E(rp)+ WfC×rf =60%×10% + 40%×4% =7.6% The standard deviation of Complete portfolio is: σc = WpC × σp = 60% × 20% = 12% Certainty-equivalent rate of return for investing in C: rc CE= Uc = rCEc- 1/2Aσc2 = 7.6% - 0.5×2.5×12%2 = 5.8% Certainty-equivalent rate of return for investing in P: rp CE= Up= rCEp- 1/2Aσp2
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Social problems: Capital Punishment Social problems have been a part of society for thousands of years. Some have vanished over time while others have uprooted to accommodate with the changing times of the world. One of the great problems of our society is capital punishment‚ which is still controversial issue. Is it acceptable and appropriate system of punishing criminals or not? As for me I support the death penalty‚ because it serves as retribution. Guilty people deserve to be punished in
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is currently involved in 7 Joint ventures in People’s Republic of China (PRC) and is in the proposal process of investing into an equity joint venture in the city of Changchun.This proposal would be one of the first two green field equity joint venture with PepsiCo having control over both the board and day-today managmenet. PepsiCo uses capital budgeting tools such as NPV and IRR to systematically evaluate their investment project. Using this evaluation method Mr Hawaux‚ vice president of Finance
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Economics 500 – Problem Set #3 Consider a firm producing an output Q using the two inputs “labor” (L) and “capital” (K) according to the production function Q = K.5L.5 (i.e.‚ the amount of output produced Q is equal to the square root of K times the square root of L). Suppose that the firm is in a short-run situation in which K is fixed at one unit (K = 1) but labor is variable. Suppose that the user cost of capital‚ r‚ is $48 for each unit of K and that the wage rate‚ w‚ the cost of one unit
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FBE 421 Prof. Briggs Problem Set #1 Please print out this document and clearly handwrite your answers to each of the questions below in the space provided. Show all your work accordingly. A. Calculate LTM (a) Revenue and (b) Net Income for Costco Wholesale (COST) using their latest financial statements as of 3Q2011. 77946+60737-53821=84‚862 MM Revenue 1303+984-871= 1‚416 MM Net-income B. Calculate Costco’s LTM (a) EBIT and (b) EBITDA. 2077+1677-1389=2‚365 MM EBIT (2077+795)+(1677+582)-(1389+549)=
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Appendix to Chapter 7 Evidence on the Efficient Market Hypothesis Early evidence on the efficient market hypothesis was quite favorable to it. In recent years‚ however‚ deeper analysis of the evidence suggests that the hypothesis may not always be entirely correct. Let’s first look at the earlier evidence in favor of the hypothesis and then examine some of the more recent evidence that casts some doubt on it. EVIDENCE IN FAVOR OF MARKET EFFICIENCY Evidence in favor of market efficiency has examined
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13. Relative Valuation - Using Market Comparables Zenu Sharma zenu.sharma@edhec.edu Course Road Map 1. Financial Markets and Management 2. Present Value 3. Introduction to Risk and Return 4. Portfolio Selection 5. The Capital Asset Pricing Model 6. Financing and Capital Structure 7. Interest Rates and the Valuation of Bonds 8. Project Appraisal 9. Capital Budgeting 10. Capital Budgeting with Financial Leverage 11. The Valuation of Companies and Stocks 12. Relative Valuation 13. Options and
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Problem 1: A project of equipment purchase of Mekong Company Ltd. has the estimated data as follows: The cost of equipment is USD 12‚000‚ the cost for transportation and installation is USD 1‚000 USD. The asset is depreciated according to a straight line depreciation scheme within 5 years. It is expected that the project can produce and sell 7‚500 units of product at the price of USD 2 per unit‚ for the first year. The operating costs for the first year (excluding depreciation) are estimated
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