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Valuation of the Firm (By Aswath Damodaran, 3rd edtion) Value per Share Chapter 16 2) Genius Media is a high growth technology firm. The value
Valuation of the Firm (By Aswath Damodaran, 3rd edtion) | |||||||||
Value per Share | |||||||||
Chapter 16 | |||||||||
2) | Genius Media is a high growth technology firm. | ||||||||
The value of its Operating Assets has been estimated at $ 530 million. | |||||||||
Genius Media has a cash balance of $ 80 million. | |||||||||
It also owns 10% of an entertainment software firm. | |||||||||
This 10% holding is recorded at its book value of $ 40 million and | |||||||||
the average price to book ratio of entertainment software firms is 2.5. | |||||||||
Finally, a competitor has sued Genius Media, claiming patent infringement. | |||||||||
There is a 25% probability that Genius Media will lose the lawsuit, | |||||||||
in which case it will have to pay out $ 100 million in damages. | |||||||||
Estimate the value of equity in the firm today. |
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