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Case Study Que of Airthread

1. The document provides questions for valuing Air Thread Connections using different valuation techniques like WACC, APV or a combination. It asks to describe how to value cash flows from 2008-2012, estimate terminal value, and account for nonoperating investments. 2. It asks what discount rate should be used to value unlevered free cash flows from 2008-2012 and for the terminal value, and whether they should be the same. 3. It asks to estimate a long-term growth rate to calculate terminal value and present value of Air Thread's going concern value. 4. It asks to calculate the total value of AirThread before synergies and its value assuming the synerg

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Simran Malhotra
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707 views

Case Study Que of Airthread

1. The document provides questions for valuing Air Thread Connections using different valuation techniques like WACC, APV or a combination. It asks to describe how to value cash flows from 2008-2012, estimate terminal value, and account for nonoperating investments. 2. It asks what discount rate should be used to value unlevered free cash flows from 2008-2012 and for the terminal value, and whether they should be the same. 3. It asks to estimate a long-term growth rate to calculate terminal value and present value of Air Thread's going concern value. 4. It asks to calculate the total value of AirThread before synergies and its value assuming the synerg

Uploaded by

Simran Malhotra
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Please find attached the excel sheet and questions beolw.

Students should bring their laptops alongwith the solution to this on Thursday. Valuation of Air Thread Connections

Suggested Assignment Questions 1. Please describe the method the methodological approach that should be used to value Air Thread (should Ms. Zhang use WACC, APV or some combination thereof). How should the cash flows be valued for 2008 through 2012? How should the terminal value or going concern be estimated? How should the nonoperating investments in equity affiliates be accounted for in the valuation? [Hint: it may be possible to use more than one technique simultaneously] 2. What discount rate should Ms. Zhang use for un-levered FCF for 2008 through 2012? Is this the same discount rate that should be used to value the terminal value? Why or Why not? 3. Develop an estimate of the long-term growth rate that should be used to estimate Air Thread's terminal value. Using your estimate of long-term growth, what is the present value of the Air Thread's going concern value? 4. What is the total value of AirThread before considering any synergies? What is the value of AirThread, assuming Ms. Zhang's estimates for synergies are accurate?

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