Discounting the terminal value, Financial Accounting

Assignment Help:

The Major Assignment Business Case Study is about American Cable Communications' proposed acquisition of the firm Air Thread Connections. The case study is available from the folder labelled ‘Major Assignment' in iLearn.
1. American Cable Communications' Senior Vice President for business development has engaged you to appraise the proposed acquisition. Accordingly, for the purpose of the Major Assignment you temporarily assume the role of Ms. Zhang (see case study page 5).
2. Consider the whole of the case study including background, supporting information and spread sheet.
3. Your task is to prepare a written appraisal report using a report format recommending whether the proposed acquisition should proceed. Include a clear justification.
4. Carefully read the enclosed Major Assignment Marking Rubric. In preparing your appraisal report make sure to consider each of the four marking criteria and your target proficiency.
Week 9 Friday 12th October 2012 2(3)
5. Your answers to the five questions listed under heading ‘Appraisal Questions' are intended to guide the appraisal, and should be clearly referred to in the appraisal report. Outline your answers to the five questions in a ‘pdf' file format attachment to the appraisal report.
6. Use the supplementary publisher spread sheet in your appraisal. The spread sheet is available from the folder labelled ‘Major Assignment' in iLearn. Include a print out of your spread sheet content in a ‘pdf' file format attachment to the appraisal report.
7 Avoid making simplified assumptions additional to those made in the case study. However, if you make assumptions in the appraisal report these should be clearly stated and have limited implications for your appraisal. Assumptions made should not contradict the pedagogical objectives of the major assignment.
8 Make sure that the appraisal is clearly informed by suitable corporate finance theory.

Appraisal Questions

1. Describe the methodology that you use to value Air Thread Connections [Hint: it may be possible to use more than one technique simultaneously].
2. Outline how you:
a. value cash flows for 2008 through 2012?
b. estimate the terminal value or going concern?
c. account for the non-operating investments in equity affiliates?
3. Explain the choice of the rate that you use in:
a. discounting un-levered FCF for 2008 through 2012
b. discounting the terminal value?
c. estimating the long-term growth?
4. Calculate the present value of Air Tread Connections on a going concern basis [Hint: use your long-term growth estimate in 3.c. above, and the supplementary publisher spread sheet.].
5. Calculate the total value of Air Thread Connections:
a. before considering any synergies
b. including synergies, assuming your estimates are correct [Hint: use the supplementary publisher spread sheet.].
Enquiries
9. Please direct ALL enquiries to the attention of the Unit-convenor. Mark your e-mail ‘Major
Assignment Enquiry - TT', and send it to [email protected]. Allow for 24 to 36 hours for a reply during week days.
Announcements
10 Please periodically monitor iLearn ‘Announcements' for information which may be broadcast about the major assignment.


Related Discussions:- Discounting the terminal value

Distinctions between a business combination and a merger, What are the lega...

What are the legal distinctions between a business combination, a merger, and a consolidation? Mergers Vs Acquisitions: When one company takes over another and clearly esta

Inter company balances-group accounts, Inter Company balances One of th...

Inter Company balances One of the companies may appear as receivable (debtor) or payable (creditor) in the other company’s books. Just like in accounting four branches, such in

Assets, all types of assets

all types of assets

Determine gross pay, Conny Duffy started working for Dexter Company on Thur...

Conny Duffy started working for Dexter Company on Thursday and 9 hours on Frida. Her annual salary is $80,000 and she is exempt white-collar employee. Determine her gross pay for h

Reason for incorporating statements into annual reports, what is the reason...

what is the reason of incorporating 1. corporate governance statement 2. audit committee statement 3. internal audit statement into annual reports?

Maximum cost recovery deduction, In May of 2010 a calendar year taxpayer, p...

In May of 2010 a calendar year taxpayer, placed in service $2,137,000 of USED 15-year recovery property. The taxpayer has taxable income of $1,175,000 before the cost recover

Cost of Loan, Given information: Offered a $20 million commercial loan pri...

Given information: Offered a $20 million commercial loan priced using a 3month LIBOR index+100bp. After some preliminary research, using a money center bank''s swap trading desk

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd