Question
Dazzle Inc. is a brand name furniture company and you are trying to estimate the value of the brand name. You have collected the following
Dazzle Inc. is a brand name furniture company and you are trying to estimate the value of the brand name. You have collected the following information on Dazzle and generic furniture companies:
| Dazzle | Generic | |
| After-tax Operating Margin | 15.00% | 10.00% |
| Return on capital | 18.00% | 12.00% |
| Cost of capital | 8.00% | 8.00% |
| Expected growth rate | 3.00% | 3.00% |
Assuming that the difference in margins and returns on capital are entirely due to brand name, estimate the value of the brand name as a percent of overall value.
|
| 20.00% |
|
| 33.33% |
|
| 40.00% |
|
| 66.67% |
|
| 100.00% |
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Multinational financial management
Authors: Alan c. Shapiro
10th edition
9781118801161, 1118572386, 1118801164, 978-1118572382
