I only need E part solved. Please get back to me as soon as possible because deadline is in a few hours.

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This exam is open book and is to be your individual work ONLY. You are not allowed to consult with anyone in answe Integrity Pledge at the beginning of semester. If you have questions about the exam, please post them in \"Your Quest way, I can deal with all students as fairly as possible, especially with those who might have the same question. You may right to delete posts or comments that are too explicit in providing solutions or answers. To receive full credit, please show all your work; showing your work will also ease getting a partial credit. Unlike midterm exam and homework, this time I am not providing official Excel templates. This template is for your co group projects or your own file(s) created from scratch. You can submit your solution in one Excel file with multiple tab need to be verifiable - either you should reference the source of your initial data or provide the calculations for further s The exam is due by 11:59 pm, August 2, Eastern Time. Late Policy specified in the Syllabus will be followed for a Grading Sheet Problem Your Points Maximum 30 Part A 25 Part B 10 Part C 15 Part D 20 Part E Total 0 100 Percentage 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% You are not allowed to consult with anyone in answering the questions. Let me remind you that you signed an Academic ions about the exam, please post them in \"Your Questions about Final Exam\" topic in Discussion Forum \"About Final Exam\". That ith those who might have the same question. You may post your questions anonymously. Posts are moderated and I also reserve the solutions or answers. ork will also ease getting a partial credit. g official Excel templates. This template is for your convenience only. You are free to use it or other templates from homework and ubmit your solution in one Excel file with multiple tabs or in several Word and Excel files. Please remember, that all your numbers our initial data or provide the calculations for further steps. Also, please state all the assumptions you are making. olicy specified in the Syllabus will be followed for any exam submitted after the due date. = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required = Goal Seek or Solver cell = Score (filled by professor) Academic inal Exam\". That I also reserve the m homework and ll your numbers This exam requires you, among other things, to estimate the stock price for Yahoo! (Ticker: YHOO), and provide the analysis as requested. You will use \"Sources of Financial Data\" listed in Course Content to obtain the necessary financial info/statements for Yahoo!, to identify its peer companies obtain pricing and financial information for them. A. Choose several peer companies for Yahoo! and justify your choice. Choose several valuation multiples and using comparable ratios of peer com (as we did in Project 2 and discussed in Conferences) and Yahoo! financial information from prospectus, estimate the company's equity value o 22, 2016. It is required for this question to list your major assumptions and properly reference sources of information that you used in your calculations.. Peer Companies: Ticker PERIOD ENDING (in millions) (in millions) (in millions) (in millions) (in millions) Google Godaddy Inc Baidu Inc Netease Inc Twitter GOOG GDDY BIDU NTES TWTR 12/31/2015 12/31/2015 12/31/2015 12/31/2015 12/31/2015 Relevant Items from Income Statement and Balance Sheet Balance Sheet Current Assets Inventory/Prepaid Expenses Total Assets Current Liabilities Total Liabilities Stockholders' Equity long-term liabilities Short-term liabilities Cash And Cash Equivalents 90,114 2,511 147,461 19,310 27,130 120,331 1,995 2,000 9,169 694 - ### 3,499 1,114 3,073 426 1,040 4 348 Interest-bearing debt (ST<) Common equity (price x shares outstanding) 3,995 255,087 Less: Cash and equivalents Equals: Enterprise value (9,169) 249,913 12,048 22,769 4,020 9,802 12,359 5,228 173 1,549 5,299 126 6,338 1,797 1,835 4,503 13 350 1,273 4,382 6,442 506 2,074 4,368 1,515 88 911 1,044 2,418 5,401 644 363 172,915 1,603 13,084 (348) 3,114 (1,549) 4,496 (1,273) 172,005 (911) 13,776 Income Statement Total Revenue Gross Profit Earnings Before Interest and Taxes Interest Expense Net Income Depreciation and amortization Exploration Expenses Shares Outstanding (millions) Jul 22, 2016 Closing Price $ Market Capitalization (millions) $ 74,989 46,825 19,360 16,348 343 743 $ 255,087 $ 1,607 1,041 (51) 69 (76) - 10,223 5,994 5,998 160 5,184 ### ### 82 29.50 $ 2,418 $ 4 160.88 $ 644 $ 3,512 2,064 1,249 1,037 199 869 $ 172,915 $ 2,218 1,489 (435) 98 (521) ### ### 695 19 13,084 Calculated Multiples EBITDA EBITDAX EV/EBITDA Multiple EV/EBITDAX Multiple P/E Multiple 16,348 16,348 15.29 15.29 35,355 (76) (76) (41.19) (41.19) (27) 5,184 5,184 0.87 0.87 208,509 1,037 1,037 165.84 165.84 4,527 (521) (521) (26.44) (26.44) (14) Yahoo Liquidity Ratio Current Ratio Quick Ratio Solvency Ratio Debt-Equity Ratio Profitability Ratio Gross Profit Ratio 4.67 4.54 0.62 0.62 3.00 3.00 2.95 2.88 8.66 8.66 23% 722% 79% 41% 47% 62% 65% 59% 59% 67% Net Profit Ratio Operating Profit Ratio Return in Investment 22% 26% 11% -5% -3% -2% 51% 59% 23% 30% 36% 16% Your assumptions and Sources http://financials.morningstar.com/competitors/industry-peer.action?t=YHOOYahoo financehttps://rivalfox.com/yahoo-competitors -23% -20% -8% sis as requested. You will need to entify its peer companies and to mparable ratios of peer companies company's equity value on July n that you used in your (in millions) Yahoo YHOO 12/31/2015 7,507 45,204 1,277 16,160 29,044 119 935 1,632 1,053 37,248 (1,632) 36,669 Solution Legend = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required 4,968 2,891 (4,813) 60 (4,359) 300 - $ $ 946 39 37,248 (4,059) (4,059) (9.03) (9.03) (181) 5.88 5.88 56% 58% tors -88% -97% -10% B. Using the same peers and industry data, please estimate Yahoo! WACC. Show all your data used for calculations. Again, please state all your assumptions and sources of information. Your assumptions Baidu Inc and Netease Inc's Levered beta is available on yahoo finance. Not need to calculate. Comparable Companies Unlevered Beta Company Google Godaddy Inc Baidu Inc Netease Inc Twitter Levered Beta 1.51 0.65 2.25 0.86 1.75 Market Value of Debt Market Value of Equity 27,130 255,087 3,073 2,418 9,802 644 1,835 172,915 2,074 13,084 (in millions) (in millions) Debt/ Equity 0.11 1.27 15.23 0.01 0.16 Median Mean Relevered Beta Yahoo Target Mean Unlevered Target Debt/ Marginal Tax Relevered Beta Beta Equity Rate 0.86 22% 0.91 7.90% WACC Calculation Company's Capital Structure Debt to Total Capitalization Equity to Total Capitalization Debt to Equity Ratio 35.75% 64.25% 7.90% Cost of Equity Risk-free rate Market risk Premium Levered Beta Cost of Equity 1.48% 4.93% 0.91 5.98% Cost of Debt Cost of Debt Taxes After Tax Cost of Debt WACC 5.67% 22.00% 4.42% 5.42% your data used for Value given in problem Formula/Calculation/Analysis required Qualitative analysis or Short answer requ e. Beta Equity/ Marginal Total Tax Rate Assets 0.90 0.44 0.06 0.99 0.86 22% 22% 22% 22% 22% Unlevered Beta 1.39 0.32 0.17 0.85 1.56 0.85 0.86 Date Google Market Price Return S&P 500 Market Price Return Godaddy Inc Market Price 12/28/2015 12/21/2015 12/14/2015 12/7/2015 11/30/2015 11/23/2015 11/16/2015 11/9/2015 $758.88 $748.40 $739.31 $738.87 $766.81 $750.26 $756.60 $717.00 1.40% 1.23% 0.06% -3.64% 2.21% -0.84% 5.52% -2.28% $2,043.94 $2,060.99 $2,005.55 $2,012.37 $2,091.69 $2,090.11 $2,089.17 $2,023.04 -0.83% 2.76% -0.34% -3.79% 0.08% 0.05% 3.27% -3.63% $32.06 $33.98 $34.13 $33.58 $32.68 $31.61 $32.69 $31.32 11/2/2015 10/26/2015 10/19/2015 10/12/2015 10/5/2015 9/28/2015 $733.76 $710.81 $702.00 $662.20 $643.61 $626.91 3.23% 1.25% 6.01% 2.89% 2.66% 2.44% $2,099.20 $2,079.36 $2,075.15 $2,033.11 $2,014.89 $1,951.36 0.95% 0.20% 2.07% 0.90% 3.26% 1.04% $30.54 $27.48 $28.17 $27.71 $27.11 $25.67 9/21/2015 9/14/2015 9/8/2015 $611.97 $629.25 $625.77 -2.75% 0.56% 4.17% $1,931.34 $1,958.03 $1,961.05 -1.36% -0.15% 2.07% $25.72 $24.88 $25.21 8/31/2015 $600.70 -4.71% $1,921.22 -3.40% $24.69 8/24/2015 8/17/2015 8/10/2015 8/3/2015 7/27/2015 7/20/2015 7/13/2015 7/6/2015 6/29/2015 6/22/2015 6/15/2015 $630.38 $612.48 $657.12 $635.30 $625.61 $623.56 $672.93 $530.13 $523.40 $531.69 $536.69 2.92% -6.79% 3.43% 1.55% 0.33% -7.34% 26.94% 1.29% -1.56% -0.93% 0.82% $1,988.87 $1,970.89 $2,091.54 $2,077.57 $2,103.84 $2,079.65 $2,126.64 $2,076.62 $2,076.78 $2,101.49 $2,109.99 0.91% -5.77% 0.67% -1.25% 1.16% -2.21% 2.41% -0.01% -1.18% -0.40% 0.76% $25.91 $25.10 $26.21 $26.34 $28.44 $26.54 $26.29 $26.98 $27.14 $29.54 $31.80 6/8/2015 6/1/2015 5/26/2015 5/18/2015 $532.33 $533.33 $532.11 $540.11 -0.19% 0.23% -1.48% 1.17% $2,094.11 $2,092.83 $2,107.39 $2,126.06 0.06% -0.69% -0.88% 0.16% $29.28 $28.69 $26.93 $26.10 5/11/2015 5/4/2015 4/27/2015 4/20/2015 4/13/2015 4/6/2015 3/30/2015 3/23/2015 3/16/2015 3/9/2015 3/2/2015 2/23/2015 2/17/2015 2/9/2015 2/2/2015 1/26/2015 1/20/2015 1/12/2015 1/5/2015 12/31/2014 $533.85 $538.22 $537.90 $565.06 $524.05 $540.01 $535.53 $548.34 $560.36 $547.32 $567.69 $558.40 $538.95 $549.01 $531.00 $534.52 $539.95 $508.08 $496.17 $524.81 Beta -0.81% 0.06% -4.81% 7.83% -2.96% 0.84% -2.34% -2.15% 2.38% -3.59% 1.66% 3.61% -1.83% 3.39% -0.66% -1.01% 6.27% 2.40% -5.46% 1.51 $2,122.73 $2,116.10 $2,108.29 $2,117.69 $2,081.18 $2,102.06 $2,066.96 $2,061.02 $2,108.10 $2,053.40 $2,071.26 $2,104.50 $2,110.30 $2,096.99 $2,055.47 $1,994.99 $2,051.82 $2,019.42 $2,044.81 $2,058.20 0.31% 0.37% -0.44% 1.75% -0.99% 1.70% 0.29% -2.23% 2.66% -0.86% -1.58% -0.27% 0.63% 2.02% 3.03% -2.77% 1.60% -1.24% -0.65% $26.51 $24.88 $25.96 $25.63 $25.16 $25.29 $26.50 Godaddy Inc Return Twitter Market Price Return -5.65% -0.44% 1.64% 2.75% 3.39% -3.30% 4.37% 2.55% $23.14 $22.97 $22.99 $24.84 $25.02 $25.75 $26.27 $25.18 0.74% -0.09% -7.45% -0.72% -2.83% -1.98% 4.33% -10.96% 11.14% -2.45% 1.66% 2.21% 5.61% -0.19% $28.28 $28.46 $30.28 $31.15 $30.85 $26.31 -0.63% -6.01% -2.79% 0.97% 17.26% 4.03% 3.38% -1.31% 2.11% $25.29 $27.96 $27.39 -9.55% 2.08% -2.70% -4.71% $28.15 4.92% 3.23% -4.24% -0.49% -7.38% 7.16% 0.95% -2.56% -0.59% -8.12% -7.11% 8.61% $26.83 $25.87 $29.06 $27.04 $31.01 $35.42 $35.67 $34.91 $35.72 $35.26 $35.86 3.71% -10.98% 7.47% -12.80% -12.45% -0.70% 2.18% -2.27% 1.30% -1.67% -0.11% 2.06% 6.54% 3.18% -1.55% $35.90 $37.00 $36.67 $36.60 -2.97% 0.90% 0.19% -1.35% 6.55% -4.16% 1.29% 1.87% -0.51% -4.57% 0.65 $37.10 $37.59 $37.84 $50.82 $50.66 $51.94 $50.42 $50.01 $48.44 $46.66 $46.75 $48.08 $49.11 $48.50 $48.01 $37.53 $39.42 $37.31 $40.17 $36.56 -1.30% -0.66% -25.54% 0.32% -2.46% 3.01% 0.82% 3.24% 3.81% -0.19% -2.77% -2.10% 1.26% 1.02% 27.92% -4.79% 5.66% -7.12% 9.87% 1.75 C. On July 25, 2016 Verizon (Ticker: VZ) announced its intent to buy Yahoo! How do your valuations compare to the Verizon's announced acquisition price? If your valuations differ from observed prices, can you briefly forward any possible explanations? For example, you should discuss and attempt to evaluate possible synergy and other effects of acquisition. Your Estimated Price Range Min Max Expected Announced Price Your explanation $ 4,800 millions How do your aluations differ or example, you of acquisition. D. The following information is for pedagogical purposes only and unlike earlier questions does not deal with real terms of the deal. In July 2016 Virgin America and ViaSat (Ticker: VSAT) announced a Joint Venture (JV) to provide Wi-Fi service on-board. ViaSat has invested $ 5 M in the venture in return for 10% ownership in the form of convertible preferred shares. By July 2017 JV is expected to generate $ 5 M in revenues with subsequent 25% annual growth. ViaSat anticipates to sell its share in JV in July 2020. Applying Value/Sales ratio of 16, what is the estimated 2020 value of ViaSat share in JV? What is the ViaSat''s implied cost of capital that justified the $ 5 M investment? How would your answers change if the annual growth were only 20%? What is the advantage of having convertible preferred instead of common equity? 2016 Investment ($ Mil) 2016 Investor's Ownership $5 10% 2017 Revenue ($ Mil) Revenue annual growth $5 25% Price / Revenue ratio 16 What is the estimated 2020 value of ViaSat share in JV? 2020 estimated revenue ($ Mil) 2020 value ($ Mil) 2020 value of Investor's Share ($ Mil) $9.77 $156.25 $15.63 What is ViaSat's implied cost of capital that justified its investment? Implied Cost of Capital How will your answers change if the annual growth were only 20%? Revenue annual growth 20% 2020 estimated revenue 2020 value 2020 value of Investor's Share $8.64 $138.24 $13.82 Implied Cost of Capital What is the advantage of having convertible preferred instead of common equity? Convertible preferred share have advantage over common shares. 1. Preference shares have a fixed dividend that must be paid before any dividends can be paid to common shareholders 2. Easliy covert into common shares. 3. In addition, in the event of bankruptcy and liquidation, preferred shareholders have a higher claim on company assets than common shareholders. uestions (Ticker: Value given in problem Formula/Calculation/Analysis required as e Qualitative analysis or Short answer bsequent at is the ur ng Part E A. The following information is for pedagogical purposes only and unlike earlier questions does not deal with real situation. Menlo Ventures provided funding for DriveUMUC start-up by investing convertible preferred shares. DriveUMUC expects to go public in 5 years, at which time it expects to have a post IPO valuation of $ 5 Billion. Until the company goes public, preferred shares will pay 8% annual dividend. a. What % of post IPO equity should VC's shares to be converted in to provide VC its expected return? b. Assume that the percentage ownership agreement remains the same as in a. What actual return VC gets, if the IPO value is $ 15 billion? 2 Billion? What if instead of an IPO, the company is acquired at $ 500 Million in 5 years? Remember that Menlo Ventures have convertible preferred shares. Given VC's hoped-for rate of return VC Investment Horizon Annual interest/Dividend Payments Funding needed Expected Post IPO Value High End Scenario IPO Value Low End Scenario IPO Value M&A scenario price Value given in problem Formula/Calculation/Analysis required Use in Goal Seek 40.0% 5 years 8.00% ($200,000,000) $5,000,000,000 $15,000,000,000 $2,000,000,000 $500,000,000 a.What % of post IPO equity should VC's shares to be converted in to provide VC its expected return? Investment Dividends Conversion value in Five years VC cash Flow 0 ($200,000,000) ($200,000,000) 1 2 3 4 5 $16,000,000 $16,000,000 ### ### $16,000,000 $16,000,000 $16,000,000 ### ### $16,000,000 Rate of return IPO Value Conversion Value $5,000,000,000 IPO percentage ownership b.What actual return VC gets, if the IPO value is $ 15 billion? 2 Billion? If instead of an IPO, the company is acquired at $ 500 Million in 5 years? VC's Terminal value Realized VC return (Hint: the easiest solution is to use RATE function. Alternatively you can set up new cash flows) Expected Post IPO Value High End Scenario IPO Value Low End Scenario IPO Value M&A scenario price $5,000,000,000 $15,000,000,000 $2,000,000,000 $500,000,000 Page 24