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Firm Value_ Equity Value_ Multiples_ Valuation - Alexander Nagornov

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Firm Value_ Equity Value_ Multiples_ Valuation - Alexander Nagornov Powered By Docstoc
					Advanced Corporate Finance                                                                            Alexander Nagornov
Assignment #2                                                                                        MIF full-time (5812437)

             Question 1A                                Question 1B                                      Question 1C
                                                                                                                   Case 1      Case 2
Market Capitalisation                     Market Capitalisation                    Market Capitalisation
  Stock Price                $      30      Stock Price                 $    35      Stock Price                          30   $      30
  Shares Outstanding                40      Shares Outstanding               20      Shares Outstanding                   60          60
Market Capitalisation        $   1,200    Common Equity Value           $   700      Option Value                              $     300
  + Preferred Stock          $      50      + Debt                      $   500    Common Equity Value              $ 1,800    $   2,100
  + Debt                     $     250      + Subordinated Debentures   $    70      + Preferred Stock              $    500   $     500
  + Minority Interest        $      35      + Minority Interest         $   120      + Debt                         $ 1,500    $   1,500
  - Cash                     $     125      - Cash                      $   400      + Minority Interest            $    100   $     100
Firm Value                   $   1,410      - Equity Investments        $   150      - Cash                         $    500   $     500
                                          Firm Value                    $   840      - Option Proceedes                        $     200
                                                                                   Firm Value                       $ 3,400    $   3,500
2007E EPS                    $       1    Firm Value                    $   840
Stock Price                  $      30    LTM EBIT                      $   100
2007E P/E Multiple                  30    LTM FV/EBIT Multiple               8.4

Firm Value                   $   1,410    Firm Value                    $   840
LTM EBITDA                   $     100    LTM EBITDA                    $   150
LTM FV/EBITDA multiple             14.1   LTM FV/EBITDA multiple             5.6



             Question 1D                                                                         Question 1E
                                                                                                                 Case 1        Case 2
Firm Value                                                                         Firm Value
  Auto division =7*2000      $ 14,000                                                DepartmentStore =9*500       $   4,500 $      4,500
  Technology = 1*4000        $ 4,000                                                 Supermarket = 7*300          $   2,100 $      2,100
Firm Value                   $ 18,000                                              Firm Value                     $   6,600 $      6,600
  - Debt                     $ 5,000                                                 - Debt                       $   2,000 $      2,000
  - Unfunded pension liab.   $    300                                                - Minority Interest          $     100 $        100
  + Cash                     $ 1,250                                                 + Cash                       $   1,000 $      1,000
Equity Value                 $ 13,950                                                + Option Proceeds                      $        400
                                                                                   Equity Value                   $   5,500 $      5,900

Shares Outstanding                 100                                             Shares Outstanding                   200          240
Equity Value per Share       $   139.5                                             Equity Value per Share         $    27.5 $       24.6

				
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