Calculate the range of potential values for pacificcorp

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Reference no: EM131117943

Part 1: Using Excel, calculate the range of potential values for PacificCorp (using the multiples for comparable regulated utilities) - the core information is provided in Exhibit 10. Prepare a spreadsheet to recreate the values for PacificCorp - show all work, formulas, and values. As hints for helping to complete Part 1, reference the following:

Ac€?c Copy Exhibit 10 into a spreadsheet Ac€?o recalculate all values using formulas

Ac€?c Create the formula to calculate the values for PacificCorp - using the data provided - you are trying to reverse engineer - how was $6,252 (Enterprise Value as a Multiple of Revenue) derived.

Ac€?c NOTE: You are given the answers - I would like you to do the work to derive the values (e.g., use formula to calculate the values).

Part 2: In a Word document, summarize answers to the following questions - your document should be 3-

4 pages (enough to answer the questions thoroughly, but, concise for an executive audience):

1) Describe what Warren Buffet considers "intrinsic value." Why is it accorded such importance, how is it estimated? What alternatives are there to intrinsic value and why does Buffet reject them?

2) Assess the bid for PacificCorp (based on your analysis of the potential values). How does it compare to the firm's values?

3) How well do you think Berkshire Hathaway has performed? What are the criteria for your assessment?

4) If you were a shareholder of Berkshire Hathaway, would you endorse the acquisition of PacificCorp? Why or why not?

see below for exhibit 10 details


(dollars in millions)


Enterprise Value as Multiple of: MV Equity as Multiple of:

MV Equity in $ Enterprise Value in $ book value in $ EPS in $ Rev EBIT EBITDA Net Income EPS book value
Alliant Energy Corp 3,333 5,600 $2,805 1.42 1.89x 13.33x 7.45x 34.15x 20.33x 1.19x
Cinergy Corp. 7,989 13,231 $4,178 2.15 2.82x 17.93x NA 32.75x 19.77x 1.91x
NSTAR 2,898 5,287 1,484 1.78 1.79x 11.62x 7.53x 27.83x 15.25x 1.95x
SCANA Corp. 4,486 7,967 2,566 2.34 2.05x 13.37x 9.25x 30.18x 16.99x 1.75x
Wisconsin Energy Corp. 4,048 7,691 2,522 2.62 2.24x 14.51x 8.97x 25.13x 13.23x 1.61x
Median 4,048 7,691 2,566 2.15 2.05x 13.37x 8.25x 30.18x 16.99x 1.75x
Mean 4,551 7,955 2,711 2.06 2.16x 14.15x 8.30x 30.01x 17.11x 1.68x
Implied Value of PacifiCorp1

3,377 0.81 6,252 8,775 9,023 7,596 4,277 5,904





6,584 9,289 9,076 7,553 4,308 5,678
















































Reference no: EM131117943

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