Week 2:

1. Monmouth: (Write-up Due)

a) Should Monmouth gain control of Robertson Tool?
b) Calculate the maximum price Monmouth can afford to pay based on DCF. Calculate the
max price using market multiples of EBIAT.
c) Why is Simmons eager to sell its position? What are the concerns and alternatives for
each of the other groups of Robertson shareholders?
d) Suggest an offer that gains support of Robertson family and majority of shareholders and
also improves the long-term trend on Monmouth EPS over the next 5 years.

Week 3:

2. Mercury Athletic: (Write-up Due)

a) Is Mercury an appropriate target for AGI? Why or why not?
b) Review the projections formulated by Liedtke. Are they appropriate? How would you
recommend modifying them?
c) Estimate value of Mercury using DCF approach and Liedtke base case projections. Is the
value conservative or aggressive? Why?
d) How would you analyze possible synergies or other sources of value not reflected in
Liedtke’s base case assumptions?

3. Laura Martin:
a) Consider the multiples analysis developed in Exhibits 2, 5,& 6. What assumptions does
this rely upon?
b) Consider the DCF analysis in Exhibit 7. How realistic are the assumptions?
c) How plausible is Martin’s terminal value multiple?
d) In what ways is the stealth tier like a call option? What is the underlying asset? What is
the strike price?
e) Would you purchase Cox Communications based on the analysis?
Week 4:
4. Blaine Kitchenware: (Write-up Due)
a) Do you believe Blaine’s current capital structure and payout policies are appropriate?
Why or why not?
b) Should Dubinski recommend a large share repurchase to Blaine’s board? What are the
primary advantages and disadvantages of such a move?
c) Consider the following share repurchase proposal: Blaine will use $209 million of cash
from balance sheet and $50 million in new debt-bearing interest at the rate 6.75% to
repurchase 14.0 million shares at a price of $18.50 per share. How would such a buyback
affect Blaine? Consider the impact on EPS, ROE, interest coverage, debt ratios, and cost
of capital.
d) As a member of Blaine’s controlling family, would you be in favor of this proposal?
Would you be in favor of it as a non-family shareholder?

5. Midland Energy:
a) How are Mortensen’s estimates of Midlands cost of capital used? How, if at all, should
these anticipated uses affect the calculations?
b) Calculate Midland’s corporate WACC. Defend your assumptions about the inputs. Is
Midland’s choice of EMRP appropriate? If not, what recommendations would you make?
c) Should Midland use a single corporate hurdle rate for evaluating investment opportunities
in all of its divisions? Why or Why not?
d) Compute a separate cost of capital for the E&P and Marketing & Refining divisions.
What causes them to differ from one another?
e) How would you compute a cost of capital for the Petrochemical division?
Week 5:

6. New Heritage: (Write-up Due)

a) Compare the business cases for each of the two projections under consideration by Emily
Harris. Which do you regard as more compelling?
b) Use the operating projections for each project to compute a net present value (NPW) for
each. Which project creates more value?
c) Compute the internal rate of return (IRR) and payback period for each project. How
should these metrics affect Harris’s deliberations? How so they compare to NPV as tools
for evaluating projects? When and how would you use each?
d) If Harris is forced to recommend one project over the other, which should she
recommend?

7. Flash Memory:
a) Assume the company does not invest in the new product line. Prepare forecasted income
statements and balance sheets foe 2010, 2011, 2012. Based on the forecasts, estimate
Flash’s required external financing: in this case all eternal financing takes the form of
notes payable from its commercial bank.
b) Recommend a course of action regarding the proposed investment in the new product
line? Should the company accept or reject this opportunity?
c) As CFO Hathaway Browne, what financing alternative would you recommend to the
board of directors to meet the financing needs? What are the costs and benefits of each
alternative?
Week 6:

8. MCI: (Write-Up Due)

a) What are the strength and weaknesses of Verizon, MCI, and Qwest? Where are the
synergies in the proposed combinations?
b) Evaluate the two offers in Exhibit 7. What explains the two structures? In each case, what
is the value to MCI shareholders?
c) Which offer should MCI accept?
d) What approach should Verizon take to win the takeover contest? Qwest?

9. Rohm and Haas:

a) Why does Dow want to buy Rohm and Haas? Was 478 per share bid reasonable? What
are the major risks inherent in this merger transaction? How and to whom does the
merger agreement allocate these risks? Hint: analyze the various provisions in case
Exhibit 4. What risk does each provision address and which party ultimately bears the
risk?
b) As of early Feb 2009, what would Andrew Liveris (Dow’s CEO) do and what should Raj
Gupta (Rohm and Haas’ CEO) do?
c) If you were the judge in the Delaware Court of Chancery, how would you resolve this
legal dispute?