Case solution of Case 19

8/15/2019 Case solution of Case 19

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Welcome

to ourPresentation


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Case AnalysisUAL 2004: Pulling out of

Bankruptcy


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Prepared for……

M. SADIQUL ISLAMPROFESSOR

DEPARTMENT OF FINANCEUNIVERSITY OF DHAKA


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!roup "o: 2#

$%a%adat &ossain '( B A )*: +,-.#+/(untasir a%man 1%an '( B A )*: +,-

#04/A ul &asan 3ara '( B A )*: +,- #0#/


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"o5Presenting………(d A ul &asan 3)*: +,-#0#

ProblemStatement


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Company Pro6le


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Case 78er8ie5


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9conomic Analysis


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P9$ L9 analysis

Pol t !al E!onom ! So! al

Te!"nolo# !al Le#al En$ ronmenta


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S%OT Anal&' '

S%OT

Stren#t"'

%ea(ne''

O))ort*n te'

T"reat'


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R '( Anal&' '

Sale' Var ab l t&Part !*lar' +,,+ +,,- +,,

Re$en*e / +01 /-2+ ., , /33 1.,,

Stan4er4 4e$ at on o5

Re$en*e7--.,+

Mean Re$en*e / 3/0.12

Re$en*e Var ab l t& 8CV9 ,.,1


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Altman ;


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F nan! al R '(

Part !*lar' +,,- +,,

*3L 0 ,4

imes )nterest 9arned -2 >@ -0 @2


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DUPONT ANALYSIS

DUPONT ANALYSIS Year 200< 2004

ROE= net n!ome> e?* t&= 8net n!ome>net 'ale'9 @8net 'ale'>total

a''et9@8total a''et>e?* t&9

Net Pro t AT>Re$en*e' -0 0@@+ -0 02#+

Re$en*e'>Total A''et' 0 #2 0 ,2

Total A''et'>Sto!("l4r'. E?* t& -< ,2 -< 2#

ROE 4, 4# 2+


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Problem Statement


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Present Case aluation:3C33 (et%od

AssumptionsTaB rate ,.-

Term nal #ro t" rate ,.,/3

Probab l t& O5 D 'tre'' ,.3

Co't O5 D 'tre'' ,.+

TaB rate ,.-

Term nal #ro t" rate ,.,/3

Probab l t& O5 D 'tre'' ,.3

Co't O5 D 'tre'' ,.+

WACC Calculation

isk-free rate

(arket eturnBeta Cost of eDuity Cost of de t

aE ateAfter taE cost of de t

alue of eDuity alue of de t

Weig%t of eDuity Weig%t of de t Additional risk premium

WACC


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Base Case aluation: 3C33(et%od

otal p8cf 2>22+ +


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$imulation G $ensiti8ityPresent Case

C 0 >2,H0 .0= so= P$ is more $ensiti8e P$ (ost $ensiti8e to WA


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Amount

Weig%ted

Amount

Present +2=,2, #=


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"o5Presenting………$%a%adat &oss)*: +,-.#+


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Cas% 3lo5 Under Alternati8es

Continuation of pension fund

Ca'" nee4e4

Payment and termination of capitallease +4+2

Payment of account paya le 2 4

Contri ution to pension fund 4

otal cas% 6nancing #>4+ #>

Cas% a8aila le

ermination of pension plan

Ca'" nee4e4

Pa&ment an4 term natt on o5 !a) tallea'e /

)a&ment o5 lon# term 4ebt / 0/.+

Pa&ment o5 a!!o*nt )a&able +-0.

l ?* 4 t& nan! n# 3,,

Total -1-/.1

Ca'" nan! n#

EB t F nan! n# +,,,

Pro!ee4' 5rom 'ale o +1+1.10

Total !a'" nan! n# 1+2

Ca'" a$a lable 773

l f


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aluation: Continuation of pensionfund

A''*m)t on'

%ACC ,./,11

TaB rate ,.-

Term nal #ro t" rate ,.,-3

Probab l t& O5 D 'tre'' ,.+

Co't O5 D 'tre'' ,./

isk-free rate

(arket eturn

Beta

Cost of eDuity

Cost of de t

aE ate

After taE cost of de t

alue of eDuity

alue of de t

Weig%t of eDuity

Weig%t of de t

Additional risk premium

WACC

isk-free rate

(arket eturn


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Val*at on Cont n*at on o5)en' on 5*n4

Total PVCF -3+01.

A44 !a'" / ,,0

F rm Val*e 7 +7

Le'' !o't o5 nan! al 4 'tre'' 703.00+

D 'tre'' a4G*'te4 rm $al*e 0 -,0

Le'' Lon# Term Debt ---+.2

Val*e o5 e?* t& 723

no o5 '"are' o*t 'tan4 n# /, ,,,

$al*e )er '"are . 7233


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$imulation G $ensiti8ity:Continuation of pension fund

C 0 +2+>J0 .0= so= P$ isless $ensiti8e

P$ (ost $ensiti8e to WA


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"o5 Presenting……(untasir a%man1%an)*: +,-#04


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Val*at on Term nat on o5)en' on )lan

A''*m)t on'

WACC 0 ++4#

aE rate 0 <

erminal gro5t% rate 0 0

Beta +Cost of eDuity +0 .0Cost of de t > 00

aE ate .

alue of de t >=+#.Weig%t of eDuity 0


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Val*at on Term nat on o5)en' on )lan

otal p8cf + #<

Add: cas% +0=24>

3irm alue 42=


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$imulation G $ensiti8ity ermination of pension plan

C 0 +.4+J0 .0= so= P$ is less $ensiti8e P$ (ost $ensiti8e to WA


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ecommendation


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Kusti6cation


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Any uery MMMM

Case solution of Case 19

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