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You asked: "This question requires you, among other things, to calculate the stock price for Yahoo! (YHOO); and provide the needed analysis as asked...
You asked:"This question requires you, among other things, to calculate the stock price for Yahoo! Inc. (YHOO); and provide the needed analysis as asked in what follows. Here is what you need to do for this question. Using “Sources of Financial Data” listed in Course Content[i] obtain the latest financial info/statements for Yahoo! Inc. (ticker YHOO), also identify its peer companies and obtain pricing and financial information for them. After that answer the following questions: Requirements: A. Develop a DCF model using excel to estimate the fair value of the firm’s common shares (use the data at yahoo.com/finance for your baseline year (2010). Don’t forget to include the terminal value (value after the forecast period, defined as 2011-2018) in your estimate. B. For each of the value drivers (i.e., sales growth and profit margin over the forecast period, tax rate, WACC, fixed and working capital investment rates, WACC), identify your sources and assumptions, and show any calculations. This is especially important for the WACC you will use to calculate the NPV, due to the sensitivity of your results to this critical parameter. C. Using comparable ratios of peer companies, estimate the company’s stock price using relative valuation method. List the major assumptions and sources of information that you used in your calculations. How do you know your assumptions are reasonable enough? Explain. D. How do your DCF and relative valuations compare with the company’s prevailing market price? If they are different, can you briefly forward any possible explanations? If they are not different, can you still justify the price that you arrived at? E. On February 1, 2008 Microsoft announced “that it has made a proposal to the Yahoo! Inc. Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion.” What was the outcome of this bid? Specifically, how did the management and the board react? How did this bid affect the company’s strategy and management? If a potential acquirer were interested in Yahoo today, what would your recommendation be on a per share basis? Is a premium justified?Make sure to justify your responses by using the available data/info and carrying out any needed and relevant calculations. " - Sent to Finance Expert Tutor on 4/16/2011 at 1:33pm You asked:"Please help with question. I am not sure how to even start.Thanks!" - Sent to Finance Expert Tutor on 4/16/2011 at 1:34pm You asked:"QN. “Critics say that because real options don’t expire according to contract as financial options do, managers can’t be counted on to pull the plug on a project (exercise an “abandonment option”) when they should. Also, projects assume lives of their own, and may not be easy to kill.”Do you agree with the above statements? Explain why yes or why no. To support your answer provide some examples and make sure to draw upon the materials from your textbooks.Qn.This question is based on the “Behavioral Finance at JP Morgan” (JPM) Case - which is attached along with this exam for your use. In a nutshell and as you will see in a moment, question 1 requires you to develop a mini case that is based on the JPM case. Of course as you will also soon see your job is relatively easy, though it needs a bit of patience and time, because you will have a working model (the JPM case) for developing such a case. The specific questions that I want you to answer for this question are listed in below. After reading and understanding the case, please answer all the following questions.1. Just list all the key behavioral phenomena discussed or mentioned in the said case.2. Just list all the key behavioral phenomena that you have learned in this class so far and as covered in your three sets of required readings: Shefrin textbook, Montier textbook, and the required articles.3. Just list those key behavioral factors that are listed under item 2 in above but not listed under item 1 in above.4. Rewrite the textual/conceptual (the no-quantitative) portion of the JPM case by discussing all the phenomena you have listed under item 3 in above. In your rewrite, make sure to just briefly explain each phenomenon/factor first, and provide an example or explanation of your own similar to the case’s “Everyday Examples of --” (those examples are highlighted in yellow in the JPM case in the exhibits part toward the end of the case.) In your rewritten case you may just refer to the specific Exhibits or Figures in the main case instead of recreating those exhibits, figures, etc in your rewrite.5. Close the rewritten case by adding a conclusion at the end in which you explain how the rewrImagine that Adaptec is contemplating a project that requires a $3.75 billion initial outlay, and features an NPV of $466 million. The firm is all-equity financed, and has $1 billion in cash that it plans to invest in the project. Adaptec’s current market value of equity is $6.68 billion. Adaptec’s investment bankers have advised the firm’s financial managers that they could raise the $2.75 billion by issuing new equity. However, Adaptec has no capacity for debt. If the firm issues new equity, then the new shareholders would come to hold 28.5 percent of the firm, which conditional on adopting the project they estimate to be worth $9.569 billion. The investment bankers have computed the NPV of the project to be about $227 million, not the $466 million computed by Adaptec’s managers. Adaptec’s managers have concluded that their firm is undervalued in the market, and that its intrinsic value would be about $13 billion if it adopts the project. In addition, the managers have concluded that the new shareholders merit 21.2 percent of the firm for their $2.75 billion investment. Nevertheless, the investment bankers have made it clear that unless Adaptec’s managers agree to give up 28.5 percent of their firm, they will not be able to raise the $2.75 billion. Assume that flotation costs are zero. Suppose that Adaptec has no debt capacity and has to rely on external equity. What value of APV would the managers of Adaptec compute if they adopted the project and financed it with equity?itten case can help investment decision making.QN. "
