Develop an estimate of the long-term growth rate

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Assignment

1. Please describe the methodological approach that should be used to value AirThread (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 AirThread's terminal value. Using your estimate of long-term growth, what is the present value of the AirThread'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?

Article: Valuation of AirThread Connections by Erik Stafford and Joel L. Heilperon.

Attachment:- AIRTHREAD ACQUISITION.pdf

Reference no: EM131456607

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