2009:

PPE	314
Construction	47
Intangible	1853
available for sale securities	102
Other	205
	2521
Inventories	450
trade receivables	728
Other	746
Cash	1863
	3787
Total Assets	6308
Share capital	1136
reserves	175
Total Equity	1311
non current	891
trade payables	1991
provisions and accruals	1510
income tax payable	89
bank loans	20
long term debt	437
other	59
	4106
Total Liabilities	4997
L + E	6308

Assume that your analysis of Lenovo indicates the following forecasts and assessments (in alphabetical order):

Accounts receivable: increase of 156 in 2010; decrease of 251 in 2011

Cost of capital is 10%

Depreciation and amortization: constant at 2009 levels for 2010 and 2011

Future free cash flows (already adjusted for interest) from 2012 to perpetuity, present valued to 2009: 3,400

Future repurchases and dividends from 2012 to perpetuity, present valued to 2009: 3,590 Income tax rate: 25% for all future periods Interest-hearing debt: 621 as of March 31, 2009, constant going forward

Interest expense: constant at 2009 levels for 2010 and 2011

Internally developed patents, fair value: 3,100M as of March 31, 2009

Inventories: decrease of 123 in 2010; increase of 44 in 2011

Net Income: 233 in 2010; 315 in 2011

Payables: increase of 442 in 2010; decrease of 51 in 2011

Payments for construction of plant and equipment in progress: 23 in 2010 and 45 in 2011

Purchased intangibles, fair value: 1,600M as of March 31, 2009

Payments to purchase completed property, plant and equipment: 110 in 2011; 112 in 2011

Retained earnings: increase of 43 in 2010; increase of 115 in 2011

Sales of PP&E: none in 2010; proceeds of 15, gain of 5 in 2011

Shares outstanding: 9,211 million as of March 31, 2009

Transfers of self-constructed property, plant and equipment from construction in progress to completed PP&E: 17 in 2010; 19 in 2011

Share repurchases: 65 in 2010; 76 in 2011

Unrecognized environment liabilities, fair value: 150M as of March 31, 2009

1. Estimate the value per share of Lenovo using the dividend discount approach as of March 31, 2009. Assume all cash flows in subsequent years occur at year-end (e.g., discount 2010 cash flows back one year).

2. Estimate the value per share of Lenovo using the discounted cash flow approach

3. Estimate the value per share of Lenovo using the balance sheet method

4. Lenovo has been trading at about $0.42 per share. Based on the preceding should you buy or sell shares?