Star river electronics ltd
This presentation is the property of its rightful owner.
Sponsored Links
1 / 9

Star River Electronics LTD PowerPoint PPT Presentation


  • 237 Views
  • Uploaded on
  • Presentation posted in: General

Star River Electronics LTD. Advanced Managerial Finance Spring 2013. Your general tasks are:. Review the historical performance of the firm Forecast financing requirements for the next two years Exercise the forecasting model to identify key driver assumptions Estimate Star River’s WACC

Download Presentation

Star River Electronics LTD

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Star river electronics ltd

Star River Electronics LTD

Advanced Managerial Finance

Spring 2013


Your general tasks are

Your general tasks are:

  • Review the historical performance of the firm

  • Forecast financing requirements for the next two years

  • Exercise the forecasting model to identify key driver assumptions

  • Estimate Star River’s WACC

  • Analyze a proposed investment in a packaging machine


Specific tasks

Specific tasks

  • Assess the current financial health and recent financial performance of the company (what strengths and weaknesses would you highlight?

  • Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? Explain the assumptions in your forecast.


Specific tasks1

Specific tasks

  • What are the key driver assumptions of the firm’s future financial performance? That is, what aspects of the firm’s activities should Koh focus on especially?

  • Estimate WACC. What methods did you use to estimate WACC? What are the key assumptions that especially influence WACC?

  • What are the FCFs of the packaging machine investment? Should Kho approve the investment?


Star river electronics ltd

WACC

  • WACC = wd (1-T) rd + we re + wprp

  • rd:

  • re: Gordon growth model or DGM and CAPM

    • rf

    • Beta: need to find the asset beta of peer(s) and then relever it at Star River Electronics’ capital structure.


Star river electronics ltd

WACC

  • wd and we: You need the market values of debt and equity to estimate the capital structure.

  • Assume the market value of debt is equal to book value. It’s reasonable assumption since 80% of Star River’s debt carries a floating rate of interest.


Star river electronics ltd

WACC

  • wd and we: You need the market values of debt and equity to estimate the capital structure.

  • Assume the market value of debt is equal to book value. It’s reasonable assumption since 80% of Star River’s debt carries a floating rate of interest.


Analysis of the packaging machine investment

Analysis of the packaging machine investment

  • WACC

  • Firm must decide between buying the equipment now or waiting 3 years


Ability to repay

Ability to repay

  • Percentage of sales method

  • Total interest expense:


  • Login