Finding the intrinsic value of GEICO' stock $718million = 34.25 million x ($70-55.75) + 67.9 million...

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Finding the intrinsic value of GEICO' stock $718million = 34.25 million x ($70-55.75) + 67.9 million x (P-$70) =488.1 million +67.9P million - 4753million 67.9P million =718 million - 488.1 million + 4753 =4982.9million Thus P = 4982.9million/67.9million = $73.39 The equation in this case is making sense as the BH market value increases to $718 million after the acquisition, meaning that it has appreciated in value. To facilitate the finding of the intrinsic value, there is the need to conduct an examination of the excess stock price. These excess equivalents are represented in the right hand side of the equation. Thus, the added value of the equity is composed of the stock price change as well as the difference in the intrinsic value and the bid price. Making the application of the above equation an appropriate way of finding the intrinsic value. When the intrinsic value obtained, which is $73.39 is compared to the price before announcement ($55.75), it is evident that the intrinsic value is greater than the id price. For that reason, the stock is considered to have been undervalued. Finding the intrinsic value of GEICO' stock $718million = 34.25 million x ($70-55.75) + 67.9 million x (P-$70) =488.1 million +67.9P million - 4753million 67.9P million =718 million - 488.1 million + 4753 =4982.9million Thus P = 4982.9million/67.9million = $73.39 The equation in this case is making sense as the BH market value increases to $718 million after the acquisition, meaning that it has appreciated in value. To facilitate the finding of the intrinsic value, there is the need to conduct an examination of the excess stock price. These excess equivalents are represented in the right hand side of the equation. Thus, the added value of the equity is composed of the stock price change as well as the difference in the intrinsic value and the bid price. Making the application of the above equation an appropriate way of finding the intrinsic value. When the intrinsic value obtained, which is $73.39 is compared to the price before announcement ($55.75), it is evident that the intrinsic value is greater than the id price. For that reason, the stock is considered to have been undervalued.

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