Flinder Valves and Controls, Essay

After reviewing your projections of Calaveras Vineyards, I used the adjusted present value method to come up with the value of the company. With this method, I assume that the whole firm is financed only through equity. Therefore, when calculating the free cash flow, debt was not taken into account. Despite that, the net present value of interest shields is added back to compensate the debt in the capital structure. With this method, the company is valued at $9.62 million.

According to the researchers the increased value results from an opportunity to utilize a specialized resources which arises solely as a result of the merger (Jensens & Ruback, 1983; Bradle, Desai and Kim , 1983). For creating operational and financial synergies managers believe that two enterprises will be worth more if merged than if operates as two separate entities. Thus, the two companies, A and B:

Although the company has been in business for over a hundred years it has encountered several challenges. One weakness is its image. As described earlier this image is not conducive to one to be associated with the kindler, softer side of humanity. Another threat or weakness is the continued outsourcing of manufacturing of parts and accessories into overseas markets and companies. Although, there is no set percentage

E. Cindy and Rob estimate that the market value of the common equity in the venture is $900,000 at the end of 2010. The market values of interest-bearing debt are judged to be the same as the recorded book values at the end of 2010. Estimate the market value-based weighted average cost of capital for Castillo Products.

Based on the above considerations, the Ke ratio of the merger company will be 11.54%. Furthermore, for the revenue growth and ROE of the merger company, there are more risks than benefits. HP’s revenue may have a recession curve in the short term. Although the merger will bring cost savings of $2.5 billion, HP cannot realize these expected benefits immediately. Other than this, there were questions on the organization culture as well. If HP could not manage its organization properly, integration would only add on to the difficulties. The biggest factor of all is that to integrate the culture existing in the two companies would be a very difficult job. Based on all the considerations, we assume that the revenue growth rate after the merger would be 3.5% and the ROE would be 11%. And as a result, the combined stock price would be 9.0. (See Exhibit 3).

in our calculations, as this company exhibited dramatic value differences to others in the sample, (likely to skew our results and prove misleading). Using the average of the revised sample field for each ratio, we inserted Torrington’s values where appropriate to generate an entity value. The findings generated two values for Torrington, 606 million and 398 million. Taking the average of these two numbers, Torrington exhibited a relative value of 502.41 million. Because of the lack of related information given in the case, and the often large differences in measures amongst competitors, different capital structures, internal management strategies, there remained many unknowns in our model. We decided it would be best to use this valuation to reaffirm our assumptions in our DCF valuation. (Please see exhibits)

a) We calculated the total value of AirThread (before considering any synergies) by subtracting the value of the non-operating assets from the going concern value. This gave us a total value of $6237.85.

The current enterprise value is $41,335 million and the equity value is $34,455 million. According to yahoo finance, the shares outstanding of our company are 647.31 million, so we can calculate the stock price for next year is $53.23. It will increase in following years.

After carefully analyzing the data given, we believe that FVC’s value is roughly $270 millions, including synergies. The company’s stand-alone equity value is more than $158 millions. The synergies that derive from this acquisition are extremely beneficial to both FVC and RSE. RSE’s purchasing power would help to reduce material costs for FVC. The acquisition would also bring in estimated tax savings of $2 millions the first year and $4 millions thereafter. RSE’s new project, CORE, is expected to improve and save in-process costs for FVC, making it more efficient and helping to increase the company’s bottom line. Moreover, FVC could utilize RSE’s marketing power and strategies to advertise their new advanced hydraulic-controls system or “widening gyre”. Flinder believed that the

In DCF valuation (Chart 2), long-term growth rate is assumed to be 4%. Change in working capital is calculated as the average of 1997 and 1996 figure and is assumed to be constant for simplicity. Terminal value is valued at $69,398.1 million and NPV is $51,525 million. Stock price will be $37.07, indicating an exchange ratio at 0.46. This is a very conservative valuation as our DCF price is lower than Amoco’s current market price.

To arrive to the correct set of cash flows to use for the most basic valuation method (the WACC), Kennecott should take net income and add back tax adjusted interest expenses, depreciation and goodwill amortization, and subtract increases in net working capital and capital expenditures. Without adjusting the net income to obtain the free cash flows, the value of Carborundum to Kennecott could justified $70-$85 per share. Multiplying the per share price of $85 by the 8 million shares outstanding, Carborundum would be worth $680 million. This figures is identical to the cash flows calculated under Exhibit 7 of the case, discounted at a discount rate of 10%, which comes out to $679 million.

For future cash flows, evaluation is done with WACC rate which consists from cost of equity and cost of debt in a weighted average. In this case, using cost of equity is not appropriate since we doesn’t know cost of debt and weights of equity and debt, it doesn’t reflect the actual rate for WACC.

In this case study, we will talk about negotiate a possible acquisition of Flinder Valves and Controls. Inc by RSE International Corporation. To know why they gave that decision and how they could do it. We will have an overview of these two companies.

Within the financial sector, there are many different types of valuation methods in which their purpose is to receive the share price of a company. Throughout this paper, I will discuss the various methods and the factors that contribute to the outcomes of each one. The context of this paper will be discussed in the manners of both the positive and negative aspects of each method. With each method, I will also explain the factors that significantly influence the price of each method used. Currently, Cenovus is trading on the Toronto Stock Exchange at a value of $17.83. One of the key aspects that I will acknowledge is that they currently have a long-term growth value of -108% and their target price is $18.55. Other factors can be

The current valuation for the company is based on the DCF valuation model which assumes, valuation based a market risk-free rate of