use the past 5 years of financial information for Eli Lilly and Merck and must use some of what you have learned this semester to pick one of the two to invest in.

In order to decide between these two pharmaceutical companies you should do the following

1. Calculate the ratios on the ‘Ratios’ tab for each of the past 5 years.
   1. Perform both benchmark and trend analysis (i.e. compare each ratio to is recent past as well as to its 2016 industry average).
   2. Once the calculations are done, in worlds describe what is going on with each company’s ratios

1. Calculate the intrinsic value of each company and compare to the current market value (well, the market value given in the spreadsheet anyway). Comment on each company’s intrinsic value vs its market value – i.e. is it unvalued, overvalued, or fairly valued.
2. Calculate each firms Weighted Average Cost of Capital – what does this tell you about each company? How is it useful in making your decision?
3. Make a definitive pick – either LLY or MRK. Use what you have done in 1 – 3 to justify/support your decision.
4. Lastly, use each company’s WACC to evaluate the projects listed on the ‘Capital Budgeting Projects’ tab. (This is not part of the valuation decision, but please do this for each firm.)
   1. If the projects are mutually exclusive, which one would you choose?
   2. If the projects are independent, which one(s) would you choose?

Answer rating: 100% (QA)

I would pick Eli Lilly because its ratios are stronger than Mercks Its intrinsic value is also highe... View the full answer