Arcadian Cash Flow and Terminal Value - 1103 Words

1. Prepare to explain the implications of case Exhibit 1 (Paige Simon’s first task). Based on that exhibit, is terminal value (TV) a material component of firm values? From the exhibit, we can find the PV of five years’ dividends is small part of the market price of the stock. In my opinion, we buy a stock then get dividend periodically, which like buy a bond. The coupon payment is dividend and the face value is terminal value. The bond value is determined by the terminal value mostly. So the stock price is also determined by terminal value. The concept of going concern can explain that Terminal value is often higher than the present value of near term cash flows, which means that a companys long-term cash-flow capacity is more†¦show more content†¦|value/EBIT: if working capital is growing, the CFO | |P/E |value/EBIT is useful for valuing capital-intensive |will be overstated which lead this method inaccurate.| |value/EBIT |businesses with high depreciation. |P/B will inappropriate for high-tech company because | |P/B |P/B: Finance institutions, P/B more fit for value |they have little tangible asset. | | |companies composed chiefly of liquid assets. | | |Discounted Cash Flow |Private equity valuation, leveraged buyout issue, |when FCF is negative | | |generally there are there situations 1. the firm does|When the capital structure is volatile | | |not pay dividends. 2. the firm pays dividends, but | | | |the dividends do not reflect the company’s long-run | | | |profitability. 3. when taking a control perspective | | |Show MoreRelatedCase 42 Essay1556 Words   |  7 Pagesresearch, development only.† Arcadian Microarray Technologies was founded in 2003 by research scientists, some of whom were previously involved in a very successful project called the Human Genome Project. Those scientists helped find links between variations in a person’s genetic code and their predisposition to disease. This was a major breakthrough in the Human DNA research area. Their business consisted of two segments DNA microarrays and Human Therapeutics. Arcadians’ management group believedRead MoreCase Study: Arcadian Microarray Technologies, Inc.1305 Words   |  6 PagesFINANCIAL MANAGEMENT CASE STUDY: ARCADIAN MICROARRAY TECHNOLOGIES, INC. EXECUTIVE SUMMARY As an investment manager from Sierra Capital Partners, Rodney Chu is interested in purchasing a 60% equity interest of Arcadian Microarray Technologies, Inc., a biotechnology firm. The bid is currently at $40 million. The Arcadian’s managers have optimistic projections for their firms’ performance over the next 11 years. However, based on Sierra’s calculations, come up a much more conservativeRead MoreArcadian Micro Essay695 Words   |  3 PagesIn 2005, Arcadian Microarray technologies, Inc. were in talks with Sierra Capital Partners to sell a 60% equity interest for $40 million to fund the growth of the company. Sierra Capital is a private equity investment company with $2 billion under management and a portfolio of 64 venture capital investments and leverage buyouts focusing strictly on the life sciences sector. Arcadian Microarray is a biotechnology firm founded in 2003 and located in Arcadia, California. The business was made up ofRead MoreCASE44 GROUP3 Essay957 Words   |  4 Pages Suggested Questions for Arcadian Microarray Prepare to explain the implications of case Exhibit 1 (Paige Simon’s first task). Based on that exhibit, is terminal value a material component of firm values? Drawing on case Exhibit 4 and your own general knowledge, where would the various estimators be appropriate? Where would they be inappropriate? (Simon’s second task) Regarding the cash flow forecasts in case Exhibit 5, at what point in the future would you set the forecast horizon for the threeRead MoreCASE44 GROUP3 Essay examples938 Words   |  4 Pagesï » ¿Suggested Questions for Arcadian Microarray 1. Prepare to explain the implications of case Exhibit 1 (Paige Simon’s first task). Based on that exhibit, is terminal value a material component of firm values? 2. Drawing on case Exhibit 4 and your own general knowledge, where would the various estimators be appropriate? Where would they be inappropriate? (Simon’s second task) 3. Regarding the cash flow forecasts in case Exhibit 5, at what point in the future would you set the forecast horizon for theRead MoreArcadian Microarray7189 Words   |  29 PagesSee discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/228180753 Arcadian Microarray Technologies, Inc. ARTICLE  · OCTOBER 2008 READS 516 2 AUTHORS, INCLUDING: Robert F. Bruner University of Virginia 287 PUBLICATIONS 1,490 CITATIONS SEE PROFILE Available from: Robert F. Bruner Retrieved on: 25 January 2016 Username: TO ACCESS THIS DOCUMENT This is a protected document. The first two pages are available for everyone