Part 1: Using Excel, calculate the range of potential values for PacificCorp (using the multiples for

comparable regulated utilities) - the core information is provided in Exhibit 10. Prepare a spreadsheet to

recreate the values for PacificCorp - show all work, formulas, and values. As hints for helping to

complete Part 1, reference the following:

Copy Exhibit 10 into a spreadsheet recalculate all values using formulas

Create the formula to calculate the values for PacificCorp - using the data provided - you are trying to

reverse engineer - how was $6,252 (Enterprise Value as a Multiple of Revenue) derived.

NOTE: You are given the answers - I would like you to do the work to derive the values (e.g., use

formula to calculate the values).

Part 2: In a Word document, summarize answers to the following questions - your document should be 3-

4 pages (enough to answer the questions thoroughly, but, concise for an executive audience):

1) Describe what Warren Buffet considers "intrinsic value." Why is it accorded such importance, how is

it estimated? What alternatives are there to intrinsic value and why does Buffet reject them?

2) Assess the bid for PacificCorp (based on your analysis of the potential values). How does it compare

to the firm's values?

3) How well do you think Berkshire Hathaway has performed? What are the criteria for your

assessment?

4) If you were a shareholder of Berkshire Hathaway, would you endorse the acquisition of PacificCorp?

Why or why not?

see below for exhibit 10 details

	(dollars in millions)				Enterprise Value as Multiple of:				MV Equity as Multiple of:
	MV Equity in $	Enterprise Value in $	book value in $	EPS in $	Rev	EBIT	EBITDA	Net Income	EPS	book value
Alliant Energy Corp	3,333	5,600	$2,805	1.42	1.89x	13.33x	7.45x	34.15x	20.33x	1.19x
Cinergy Corp.	7,989	13,231	$4,178	2.15	2.82x	17.93x	NA	32.75x	19.77x	1.91x
NSTAR	2,898	5,287	1,484	1.78	1.79x	11.62x	7.53x	27.83x	15.25x	1.95x
SCANA Corp.	4,486	7,967	2,566	2.34	2.05x	13.37x	9.25x	30.18x	16.99x	1.75x
Wisconsin Energy Corp.	4,048	7,691	2,522	2.62	2.24x	14.51x	8.97x	25.13x	13.23x	1.61x
Median	4,048	7,691	2,566	2.15	2.05x	13.37x	8.25x	30.18x	16.99x	1.75x
Mean	4,551	7,955	2,711	2.06	2.16x	14.15x	8.30x	30.01x	17.11x	1.68x
Implied Value of PacifiCorp1			3,377	0.81	6,252	8,775	9,023	7,596	4,277	5,904
					6,584	9,289	9,076	7,553	4,308	5,678