I AT&T LTE 12:24 AM * 55%-, e Sign ln or Sign Up | Chegg.c x" e chegg Study l Guided Soluti y D https://schools.interpretive - https://schools.interpretive.com/fsui2/data.php?token=0&csfiledl&id-mucmhaygnh/mv STUDENT/TEAM SBU Valuation When buying or selling an SBU, it is important to set an appropriate price. Real-world valuation methods may not work well for the short time frame of the simulation, so the authors suggest one (or more) of the following methods: simulation, so (or more) of the following methods Price/Book Value of 1.0 to 1.3: This valuation indicates how much you are paying over the book value of the company. Net Present Value> 0: The net present value calculation sums the present value of the estimated profits over the next three years, then subtracts the premium paid, where the premium is the difference between the asking price and the book value. Price /Earnings Ratio between 10 and 15: This valuation estimates the number of years it would take to recoup the cost of the company given the projected profit for a period. The SBU Valuation analysis will perform the calculations for you, but it is important to provide the tool with appropriate inputs, and to understand what it is doing. Given below are sample inputs using Venture #1 for the book value, period profit, and purchase price. The discount rate is assumed to be 7%, prime rate at the beginning of the simulation. I AT&T LTE 12:24 AM * 55%-, e Sign ln or Sign Up | Chegg.c x" e chegg Study l Guided Soluti y D https://schools.interpretive - https://schools.interpretive.com/fsui2/data.php?token=0&csfiledl&id-mucmhaygnh/mv STUDENT/TEAM SBU Valuation When buying or selling an SBU, it is important to set an appropriate price. Real-world valuation methods may not work well for the short time frame of the simulation, so the authors suggest one (or more) of the following methods: simulation, so (or more) of the following methods Price/Book Value of 1.0 to 1.3: This valuation indicates how much you are paying over the book value of the company. Net Present Value> 0: The net present value calculation sums the present value of the estimated profits over the next three years, then subtracts the premium paid, where the premium is the difference between the asking price and the book value. Price /Earnings Ratio between 10 and 15: This valuation estimates the number of years it would take to recoup the cost of the company given the projected profit for a period. The SBU Valuation analysis will perform the calculations for you, but it is important to provide the tool with appropriate inputs, and to understand what it is doing. Given below are sample inputs using Venture #1 for the book value, period profit, and purchase price. The discount rate is assumed to be 7%, prime rate at the beginning of the simulation
