Case 10, What Are We Really Worth By Case in Finance

Case 10 What Are We Really Worth? 43 Questions: 1. What are the advantages and disadvantages of going public Do you agree with Billy's concerns, or do you concur with the other members of the Goodman family regarding the issuance of an IPO? Explain why. Comment on Kelly's preference of the corporate value model. Based on her approach, what would Orange Brite's selling price per share be if they were to issue 30 million shares? 2. 3. How does Kelly's price estimate compare with Billy's price estimate based on the price-ratio models? What are the pros and cons of Billy's preferred approach? How far off would Joey's price estimate be if he were to use a three-stage approach with growth assumptions of 30% for the first three years, followed by 20% for the next two years, and a long-term growth assumption of 6% thereafter? Assume that the firm pays a dividend of $1.50 per share at the end of the first year 4. 5. Based on all three estimates and on the valuation figures for the three competitors, how much per share do you think that Orange Brite is worth? Explain your rationale. Case 10 What Are We Really Worth? 43 Questions: 1. What are the advantages and disadvantages of going public Do you agree with Billy's concerns, or do you concur with the other members of the Goodman family regarding the issuance of an IPO? Explain why. Comment on Kelly's preference of the corporate value model. Based on her approach, what would Orange Brite's selling price per share be if they were to issue 30 million shares? 2. 3. How does Kelly's price estimate compare with Billy's price estimate based on the price-ratio models? What are the pros and cons of Billy's preferred approach? How far off would Joey's price estimate be if he were to use a three-stage approach with growth assumptions of 30% for the first three years, followed by 20% for the next two years, and a long-term growth assumption of 6% thereafter? Assume that the firm pays a dividend of $1.50 per share at the end of the first year 4. 5. Based on all three estimates and on the valuation figures for the three competitors, how much per share do you think that Orange Brite is worth? Explain your rationale