Case 10 2015 64 687.500 SCIEO 26 161.718.750 13.343.750 53.375,000 000'000 96 Questions: 161,71 1. What are the advantages and disadvantages of gun Do you agree with Billy's concerns, or do you concur wi other members of the Goodman family regarding the iss of an IPO? Explain why. 2014 57,621,600 70426.400 128.048.000 3.609 600 34 438,400 000000'S8 128.048,000 2 Comment on Kelly's preference of the corporate value Based on ber approach, what would Orange Brite's price per share be if they were to issue 30 million shar 3. How does Kelly's price estimate compare with Billy estimate based on the price-ratio models? What are and cons of Billy's preferred approach? 87.640,541 3.128.100 12512432 72,000,000 17.640,541 4. How far off would Joey's price estimate be if he were three-stage approach with growth assumptions of 30 first three years, followed by 20% for the next two a long term growth assumption of 6% thereafter? As the firm pays a dividend of $1.50 per share at the first year. Table 3 2013 45.573.08 42,067459 Orange Brite International's 5-year Balance Sheets 2012 ,000,000 36,000,000 2011 30,616,462 75,000.00 4,600.000 19,400,000 52.000.000 75.000.000 5. Based on all three estimates and on the valuation the three competitors, how much per share do you Orange Brite is worth? Explain your rationale. CEROPORC 55 666 294 4.329 801 26.336.694 25000, DOO 55.666.294 WA Rally SHOC 000000005 255 000 000 000 000 STE SELEDE 140.000.000 3526.675 8.00250 67.290.625 3491050 27430 ty the firm's net capital investment from yer (NOPAT) and were discounted discount rate (ghted average cost of capital free cash flow would grow at a rate of 2014 the second year, and finally settle down of heater. The firm's equity value was ories outstanding debt owed to creditors Kellyed a risk-free rate of 4) a market tisk Sea of the three competitors when deter. ution projects for a major consulting firm, of the use of price-ratio models for valuing 2054 400 150 000 149.000 216.001.000 704540 141 651 67.335250 3.165.750 52.219.500 2427100 case it 10 P. 204 005 CEIP 300.250.000 153.127,500 4206.746 87072,500 61.848.254 1876.065 59.971.389 23.9.50 HW shed involved using suitable price-earnings, price. and price cash flow multiples in conjunction with e timearning, sales, book value, and cash flows the four year werage compounded growth rate levalt variables and then discounted the year ahead quod rate of return on cquity (based on the capital en puts that Kelly used). or, DAlex Hexter, on the other hand, had an of common stock valuation via the discounting we arealistic required note of return and various junction with industry benchmarks, when valuing DE Hoter's advice. Accordingly, Joey decided to model to value the firm's equity. "What will we do tilly afferent!" Asked Kelly looking rather con o back to the drawing table and examine our inputs. Bly. "We'll each have to be within a reasonable Table 2 2012 2013 Orange Brite International's 5-year Income Statements 000000 s22 108,000.00 ooOOO ZEL 3,600,000 72,000,000 41.400,000 2.760,000 38.600.000 15.456,000 23.184.000.0 2011 100,700,000 45,315,000 55.385.000 3,061.646 33.231.000 19,092.354 1.743025 17.349,328 TEE6E69 10.409,5970 Table 1 in Ratios for Top 3 Competitors Sinerte Chemscape Ultra Clean 236 77 29 13 ta 24.6 12.1 2.8 16.7 228 42 2.9 147 cluding depreciation Expenses Before Interest & Taxes Before. Taxes expense mion bit Case 10 2015 64 687.500 SCIEO 26 161.718.750 13.343.750 53.375,000 000'000 96 Questions: 161,71 1. What are the advantages and disadvantages of gun Do you agree with Billy's concerns, or do you concur wi other members of the Goodman family regarding the iss of an IPO? Explain why. 2014 57,621,600 70426.400 128.048.000 3.609 600 34 438,400 000000'S8 128.048,000 2 Comment on Kelly's preference of the corporate value Based on ber approach, what would Orange Brite's price per share be if they were to issue 30 million shar 3. How does Kelly's price estimate compare with Billy estimate based on the price-ratio models? What are and cons of Billy's preferred approach? 87.640,541 3.128.100 12512432 72,000,000 17.640,541 4. How far off would Joey's price estimate be if he were three-stage approach with growth assumptions of 30 first three years, followed by 20% for the next two a long term growth assumption of 6% thereafter? As the firm pays a dividend of $1.50 per share at the first year. Table 3 2013 45.573.08 42,067459 Orange Brite International's 5-year Balance Sheets 2012 ,000,000 36,000,000 2011 30,616,462 75,000.00 4,600.000 19,400,000 52.000.000 75.000.000 5. Based on all three estimates and on the valuation the three competitors, how much per share do you Orange Brite is worth? Explain your rationale. CEROPORC 55 666 294 4.329 801 26.336.694 25000, DOO 55.666.294 WA Rally SHOC 000000005 255 000 000 000 000 STE SELEDE 140.000.000 3526.675 8.00250 67.290.625 3491050 27430 ty the firm's net capital investment from yer (NOPAT) and were discounted discount rate (ghted average cost of capital free cash flow would grow at a rate of 2014 the second year, and finally settle down of heater. The firm's equity value was ories outstanding debt owed to creditors Kellyed a risk-free rate of 4) a market tisk Sea of the three competitors when deter. ution projects for a major consulting firm, of the use of price-ratio models for valuing 2054 400 150 000 149.000 216.001.000 704540 141 651 67.335250 3.165.750 52.219.500 2427100 case it 10 P. 204 005 CEIP 300.250.000 153.127,500 4206.746 87072,500 61.848.254 1876.065 59.971.389 23.9.50 HW shed involved using suitable price-earnings, price. and price cash flow multiples in conjunction with e timearning, sales, book value, and cash flows the four year werage compounded growth rate levalt variables and then discounted the year ahead quod rate of return on cquity (based on the capital en puts that Kelly used). or, DAlex Hexter, on the other hand, had an of common stock valuation via the discounting we arealistic required note of return and various junction with industry benchmarks, when valuing DE Hoter's advice. Accordingly, Joey decided to model to value the firm's equity. "What will we do tilly afferent!" Asked Kelly looking rather con o back to the drawing table and examine our inputs. Bly. "We'll each have to be within a reasonable Table 2 2012 2013 Orange Brite International's 5-year Income Statements 000000 s22 108,000.00 ooOOO ZEL 3,600,000 72,000,000 41.400,000 2.760,000 38.600.000 15.456,000 23.184.000.0 2011 100,700,000 45,315,000 55.385.000 3,061.646 33.231.000 19,092.354 1.743025 17.349,328 TEE6E69 10.409,5970 Table 1 in Ratios for Top 3 Competitors Sinerte Chemscape Ultra Clean 236 77 29 13 ta 24.6 12.1 2.8 16.7 228 42 2.9 147 cluding depreciation Expenses Before Interest & Taxes Before. Taxes expense mion bit
