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Case Study: American Greeting Cards
Assume your group are consultants specialized in finance and accounting.You have been hired by American Greeting Cards to advise the Board of Directors about the firm's dividend policy. In your report to the Board of Directors of American Greeting Cards, you will need to answer the following questions, using data from the case:
1) Do you think the current EBITDA multiple for American Greetings is appropriate? If not, what multiple of EBITDA do you think is justified? What is the implied share price that corresponds to that multiple?
2) Prepare a model of American Greetings cash flows for fiscal years 2012 through 2015, using the two sets of ratios in case Exhibit8. Based on the discounted cash flows associated with the forecast, what is the implied enterprise value of American Greetings and the corresponding share price?
3) What are the key drivers in your model?
4) What do you believe to be the value of American Greeting shares and what do you recommend to the Board about repurchasing the shares?Be sure to make all of your assumptions explicit.
Determine the interest expense that Rainey Corporation will show with respect to these bonds in income statement for the fiscal year ended September 30, 2010, suppose amortized premium is $67,000.
Profit margin, return on assets, and return on equity ratios of all three companies (Remember your bond payment will depend on the profit margin and cash flow of the company)
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Why are cash flows that are connected to common stock difficult to estimate? How does this compare to those related to bonds.
How do you conduct comparative shopping when different pizza stores have different size pans?
How many less payments will you have to make to pay off this debt if you transfer the balance to the new card?
An insurance company that is considering directing its 1,000 units per year of procedure business to your organization has approached you.
If this project were instead undertaken by a similar U.S.-based company with the same risk-adjusted cost of capital, what would be the net present value and rate of return generated by this project?
Calculate the average monthly rate of return for each of your chosen stock markets and Calculate the standard deviation of returns for each of your chosen stock markets over this period.
You are in a new city council person for the City of Scottsdale, Arizona. You are aware that many cities have been in the news recently for financial crises for which the council or board is being held accountable.
The company's required rate of return on investment projects is 20 and what is the Net Present Value (NPV) of this project? Should this project be accepted?
jane stevens is 30 years old and she is reviewing her retirement plans. she currently has 20000 in a retirement
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