Warren E. Buffett, 2005 Case Questions: 1. What is the possible meaning of the changes in stock price for Berkshire Hathaway and Scottish Power plc on the day of the acquisition announcement? Specifically, what does the $2.17-billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp? Based on the multiples for comparable regulated utilities, what is the range of possible values for PacifiCorp? What questions might you have about this range? Assess the bid for PacifiCorp. How does it compare with the firm’s intrinsic value? As an alternative, the instructor could suggest that students perform a simple discounted cash flow (DCF) analysis. How well has Berkshire Hathaway performed? How well has it
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Please assess the economic benefits of owning and producing an album versus licensing an artist’s recording. What are the initial outlays under either scenario? What are the benefits over time? Do the NPV and IRR results suggest that one scenario is superior to the other? What uncertainties or qualitative considerations might influence your recommendation? How do variations in the forecasted sales affect the decision? Please estimate the impact on NPV from a change in your estimate of future sales for Adair Roscommon’s album. What should Alison Brown do? Prepare a recommendation as to whether Compass Records should license Adair Roscommon’s next recording, or produce and own it.
Genzyme / Gel Tex Pharmaceuticals Joint Venture Case Questions: 1. 2. 3. 4. 5. 6. What should Greg Phelps recommend? How can you determine expected value of NPV? Why is Genzyme engaged in joint venture negotiations with GelTex? How does a joint venture compare to other possible forms of corporate affiliation such as acquisition and supplier-customer relationships? Please assess Exhibits 3 and 4 of the case. What is the maximum that Genzyme should be willing to pay for its interest in the joint venture? On what assumptions is it based? What would you guess to be the key assumptions that drive the venture’s enterprise value? Are there any qualitative issues that might affect value?
JetBlue Airways IPO Valuation Case Questions: 1. 2. 3. What are the advantages and disadvantages of