Please open the practice set and follow the instructions. It may help your understanding of the model's formulation to review my explanation of the model in the YouTube video at the following address

Name_____________________

Practice Set for Chapters 16,17,18:

Lori Corp. has an enterprise value of $188,000,000, long term debt of $82,000,000, and an under-funded pension obligation of $31,800,000. If Lori has 155,000 shares outstanding (and no shares under option), please compute Lori’s intrinsic value per common share.

Assume the same information as the prior problem. In addition, Lori Corp. has 35,000 shares under option and “in the money”. Please use the exercise value approach (discussed in the text on page 371) and assume that all 35,000 options will be exercised (with no proceeds – because future grants will offset any proceeds). What is the new intrinsic value per common share?

You are valuing Melissa Corporation. You have discounted the future free cash flows back to the present at an appropriate discount rate and get a present value of $140,000,000. When reviewing the balance sheet, you identified $61,500,000 in excess cash (classified as non-operating), 50,000 shares of stock in a non-operating subsidiary that the company paid $100 per share for when purchased two years ago that is now valued in an active market at $218 per share. What is the enterprise value for Melissa Corporation?

Please use the financial valuation model located in this assignment tab for the remaining problems. What would happen to Chipotle’s valuation (intrinsic value per share) if the number of new stores per year increased by 15 stores per year after 2024 (2024 is projected by Chipotle management to be 285 to 315 for an average of 300). So, the 2025 estimated new stores would be 315 and this would grow by 15 stores to 585 in 2043. By adding 15 additional stores per year – so in 2025 Chipotle would add 315 new stores, in 2026 Chipotle would add 330 new stores, and so on until it levels off at 585 stores in perpetuity in 2043. What is the new intrinsic value per share?

Please return to the original financial valuation model located in this assignment tab. What would happen to Chipotle’s intrinsic value per share if the investment in leasehold improvements (per new store opened) went from the assumed historically based $700,000 per new store to $900,000 per new store due to increases in the costs of equipment and inflationary impacts on metal and furniture? Model this increase starting in 2024 and continuing to 2043 starting a $900,000 and increasing at 2.5% per year. What is the new intrinsic value per share?

For this problem, go back to the original valuation model then please type in a sensitivity that you believe plausible for Chipotle’s future (remember sensitivity analysis changes just one variable at a time to view the impact on the value of the firm) and then run this using the model (after first going back to the original model and then making the change). Please do not repeat the two sensitivities you completed in questions 4 and 5 above. My sensitivity analysis involves changing ________________________________________ and the new intrinsic value resulting from this change is $______per share.

Go back to the original model. Changing only the average number of new stores per year (originally set at 300 per year) how many new stores will Chipotle need annually from 2024 to 2043 to force the model intrinsic value to Chipotle’s market price today of $2,233 per share?

Going back to the original model, what annual increase in sales per store as a percentage would Chipotle need to force the model’s intrinsic value to Chipotle’s market price today of $2,233 per share?