Question: Please answer all questions. Use Warren Buffett case study of berkshire hathaway's purchase of geico shares. QUESTION: What is the IRR of Berkshire Hathaway's Geico
Please answer all questions. Use Warren Buffett case study of berkshire hathaway's purchase of geico shares. QUESTION: What is the IRR of Berkshire Hathaway's Geico holdings at the time of the Announcement?
Hint : Use the Total Market Value of Gieco Shares held by Berkshire Hathaway at the time
of Announcement as part of the Terminal Value
Hint : Instead of using whole dollar amounts for Total Dividends, Berkshire's Initial and
Terminal and Total cite them in millions of dollars ie $ is stated as $ VARIBALES NEEDED TO ANALYZE THE CASE
Berkshire Hathaway Price per Share before the Announcement
Berkshire Hathaway Price per Share after the Announcement
Per Share Gain in Berkshire Hathaway after the Announcement
Berkshire Hathaway Shares Outstanding
Total Market Value of the Gain in Berkshire Hathaway
Note: This is not the total market value of Berkshire Hathaway after the Announcement
Geico Shares held by Berkshire Hathaway
Net Gain in Value of Berkshire's Geico Holdings at the $ offer
Hint: x
Total Market Value of Geico Shares held by Berkshire Hathaway at time of Announcement
What did Berkshire Hathaway pay for Geico Shares in
Note: Assumes they were all purchased at the same time
Geico Shares publicly held
Geico Share price before the announcement
Berkshire Hathaway price offered for Geico per share
After the announcement, what Intrinsic Value did the Market place on Geico Stock?
Hint: Intrinsic Value Formula is: x X where you have to solve for X since X is the Intrinsic Value
Applying the IRR as the future growth rate, what might a share of Geico stock be worth in five years after the Berkshire acquisition?
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