Finance 725Spring 2006 J. E. Hodder Corporation Fund Course Timetable Tuesday, January 17: Advantages Thursday, January 19: Clarkson Lumber Organization Reading: Note on Economical Analysis a.
How is a company’s financial performance? (Examine appropriate financial proportions. ) b. Why offers Clarkson Timber borrowed increasing amounts inspite of its regular profitability? c. How provides Mr. Clarkson met the financing needs of the firm during the period 1993 through 1995? Gets the financial durability of Clarkson Lumber increased or damaged? d. How attractive could it be to take control discounts?
Wednesday, January 24: Clarkson Lumber Company (continued) Reading: a. Note upon Financial Predicting b. Note on Loans a. Just how much of a financial loan will Mister. Clarkson ought to finance the expected development in sales to $5. 5 mil in 1996 and to consider all the control discounts? (Prepare a projected income declaration for 1996 and a pro manera balance sheet by December thirty-one, 1996. ) b. As Mr. Clarkson’s financial mechanic, would you need him to go ahead with, or to reevaluate, his awaited expansion and plans for more debt funding?. As the banker, might you approve Mr. Clarkson’s loan request, and if so , what conditions do you put on the money? Thursday, January 26: SureCut Shears, Incorporation. a. Examine SureCut’s monetary performance using standard percentages. b. Why can’t SureCut repay it can loan promptly? In dealing with this query, you may find this useful to create a “sources and uses” statement for the period Summer 30, 1995 , 03 31, mil novecentos e noventa e seis. Tuesday, January 31: SureCut Shears (continued) a. What actions might you recommend that SureCut take in in an attempt to address it is financial concerns? If Mr.
Stewart agrees to a mortgage extension and your recommendations are implemented, when ever will SureCut be able to pay back the loan fully? b. Would you, as Mr. Stewart, agree to a loan extendable? What circumstances or conditions would you require? c. Assess the nature of the financial complications facing SureCut with the ones from Clarkson Timber. Thursday, Feb 2: Advanced Technologies, Inc. Case Submission #1 Because of a. Within a volatile market such as semiconductor equipment production, how useful is long lasting financial planning? b. Exactly what are the key characteristics of ATI’s markets and operating guidelines?
How do these kinds of characteristics effect the company’s economic structure? c. Has Mr. Michaels done a good task of financial organizing? What set of possible conditions would place ATI beneath the greatest loans pressure, and just how great could that pressure be? m. Should ATI sell fairness in 1998, therefore bringing it is financial structure more based on those of it is main rivals? Tuesday, Feb . 7: Continental Carriers, Inc. a. Just how is the company’s financial efficiency? (Examine appropriate monetary ratios. ) b. Offered the nature of CCI’s business, how much debt should it support?. Exactly what are the individual costs of the different funding alternatives advised? Thursday, March 9: Ls Carriers (continued) a. What information will the EBIT graph and or chart (Exhibit 3) provide? What inferences do we draw from it? b. Exactly what the qualitative advantages and disadvantages of each of the forms of financing under consideration? c. Just how should the acquisition of Midland Freight be loaned, taking into account the explicit costs of the different alternatives and also other relevant factors? Tuesday, Feb 14: Debt Policy at UST Incorporation. a.
From your perspective of a bondholder, precisely what are the primary features and business risks pertaining to UST? b. Why is UST considering a leveraged recapitalization after this sort of a long good conservative financial debt policy? c. Estimate the incremental effect on UST’s benefit if the complete $1 billion recapitalization is integrated immediately (January 1, 1999). Assume a 38% taxes rate and perpetual debts. Also examine, via a pro forma cash flow statement, if UST should be able to make rates of interest. d. Might UST be better off using a different first debt level? Should it modify the debt level through period? e.
Will the recapitalization hamper UST’s ability to maintain its extended history of dividend payments? Thursday, February sixteen: No Course Meeting A “make-up” treatment is tentatively scheduled for 7: 00 PM upon Thursday Feb 2nd. The topic will be a quick review of Capital Structure Theory. Tuesday, March 21: Stone Container Firm (A) a. Compare Roger Stone’s progress and financial strategies with those of his predecessors. w. Examine the sensitivity of Stone Container’s earnings and cash flow to the paper and linerboard charges cycle. Believe sales volume of 7. five million tons per year and a 35% marginal taxes rate.
What would be the a result of a $50 per ton price boost? Is such an industry-wide selling price increase credible? c. What should be Natural stone Container’s economical priorities in 1993? g. Of the loans alternatives defined in the case, which would be in the best interests of Stone’s investors? Which will be in the needs of the high-yield debts holders? Which usually would be well-liked by its bank creditors? Thurs night, February 23: Stone Textbox Corporation (continued) Case Submission #2 Because of Tuesday, March 28:. Pioneer Petroleum Corporation a.
Really does Pioneer calculate its general corporate weighted average cost of capital effectively? b. The moment evaluating jobs and allocating investment cash among sections, should Leader use a one corporate cost of capital or multiple divisional hurdle prices? If multiple rates are being used, how should they be identified? c. Really should projects within a single split use the same hurdle price? If not, how ought to different standards be decided? Thursday, March 2: Marriott Corporation: The price of Capital (Abridged) a. Are the four pieces of Marriott’s monetary strategy in line with its development objective? m.
Why does Marriott use divisional hurdle prices instead of whether company-wide rate or project-specific rates? c. Estimate the WACC intended for Marriott overall. What free of risk rate and risk high quality did you make use of in price the cost of collateral? How performed you measure the firm’s expense of debt? Tuesday, March several: Marriott Corporation (continued) a. Estimate the price of equity, expense of debt, and WACC for Marriott’s hotels and its cafe divisions. m. What is the expense of capital to get Marriott’s contract services department? How can you approximate that division’s equity costs without public comparable firms?
Thursday, Mar 9: Pressco, Inc. (1985) a. What is the Net Present Value (NPV) of the physical drying gear investment chance (as of December 1985) assuming a 12% expense of capital to get Paperco? Assume the rumored new duty proposal is not passed and the new equipment is installed in 12 , 1986. b. What is the NPV with the investment project assuming that the brand new tax plans are passed, the new drying equipment is installed in December 1986, and Paperco indications a capturing purchase deal soon enough being eligible for the 8% Expense Tax Credit and the usage of ACRS devaluation?. Ms. Rogers knows that Paperco’s management included a 6% general pumpiing assumption into its overall expense of capital estimation. She also is aware of Paperco’s management felt that fuel costs would remain unchanged through 1990 after which rise by 6% each year thereafter. Simply how much, if at all, would the use of this info change the project’s NPV estimation? Spring Break Tuesday, Drive 21:. Elizabeth. I. du Pont de Nemours and Co.: Ti Dioxide a. What are Ni Pont’s competitive advantages in the Titanium Dioxide market as of 1972? Just how permanent or perhaps defensible are they?
What must Du Pont do to retain its competitive advantages in the foreseeable future? b. Provided the forecasts provided in the case, estimate the incremental cash flows connected with Du Pont’s growth approach and its maintain strategy for the Titanium Dioxide market. How much risk and uncertainty encompass these long term cash runs? c. Sow how does15404 competitors interact to Du Pont’s choice of both strategy? The other factors will need to Du Pont consider in creating this decision? Which will strategy do you recommend? Thursday night, March twenty three:. Wilmington Touch and Pass away a. Are definitely the inflation presumptions used in the cash flow projections onsistent together with the implicit inflation assumption within a 20% difficulty rate? n. Critically evaluate the sales predictions for Wilmington, its competition, and the marketplace as a whole. Why does exhibit several indicate a declining market share for Wilmington? Why are other competitors growing more rapidly than Wilmington? c. Is it sensible to imagine the competition is not going to purchase new-technology grinders (either Icahn or one of the evident German alternatives)? If rather you imagine Wilmington’s rivals purchase modern grinders, just how should the sales forecast be modified? m.
What are feasible implications with the higher quality shoes produced for the Icahn (or similar) equipment for unit sales predictions and possible pricing differentials? e. Is there other aspects of the cash circulation estimates which should be questioned? Tuesday, March twenty-eight: Wilmington Touch and Perish (Continued) Case Submission #3 Due Thursday, March 35: Interco a. Assess Interco’s financial efficiency. Why is the company a takeover target? b. As a member of Interco’s plank are you persuaded by the monthly premiums paid analysis (exhibit 10) and the equivalent transactions examination (exhibit 11)? c.
How exactly does Wasserstein Perella’s estimated value range of $68 , $80 per prevalent share for Interco derive from the assumptions in show 12? As a member of Interco’s board, which usually of those assumptions would you possess questioned? g. How will you advise the Interco plank on the $70 per reveal offer? Tuesday, April 4: Bougainville Power Station Browsing: Brealey , Myers, Phase 19 OR Ross, Westerfield, , Jaffe, Chapter 18 a. Exactly what are the beliefs of loan subsidies on the English and Japanese prices for bids? b. Precisely what are the Present Ideals for the Interest Tax Protects on each bid?. Is 100% debt maximum for the power station tools purchase? In the event that not, just how should the put money evaluations end up being adjusted? m. What is the correct discount price for considering the Base Case NPV? Thursday night, April 6: Southport Minerals Inc. a. What are the advantages and downsides of the methods suggested in the case for assessing the Firstburg Project? Exactly what the advantages of APV compared to the techniques in the case? n. How will you estimate an unlevered cost of equity for this project? c. How ought to anticipated inflation be integrated in the task evaluation?. What are the assumptions with regards to projected money flows or perhaps loan monthly payments that you think are possibly overly hopeful or excessively pessimistic? Tues, April 11: Southport Mineral deposits (continued) Case Submission #4 Due Thurs, April 13: Option Costs and Real Options We Reading: Brealey , Myers, Chapters 20-22 OR Ross, Westerfield, , Jaffe, Chapters 22 and 23 Tues, April 18: Option Charges and Genuine Options 2 Thursday, The spring 20: Alternative Pricing and Real Options III Thursday, April twenty-five: Wire Tel a.
Estimate the value of the first generation product employing APV. How much of that value is due to funding with the anchored bank loan? n. What is the result of the to be able to sell the manufacturing gear for $4 million in year three if demand for the initially generation mobile phones is low? c. What must be the minimum benefit of the progress option symbolized by the second era product in order to justify beginning Wire Tel? Thursday, April 27: MW Petroleum Firm (A) a. Is it fair to expect the MW homes are more valuable to Apache than to Amoco?
What sources of benefit most plausibly account for the between customer and owner? b. Benefit all the MW reserves employing APV. Can be your calculate more likely to be biased excessive or low? What are the sources of prejudice? c. How would you structure an research of MW as a collection of assets-in-place and alternatives? d. Centering on proved undeveloped reserves, what is the strike price intended for the inlayed option? Precisely what are the current property value, movements, and other insight parameters required for an option valuation? Tuesday, Might 2: MW Petroleum Organization (continued) Circumstance Submission #5 Due Thursday, May 5: Course Assessment