Problem:
Using the publicly traded company Tiffany and Company (TIF)
Report on the company’s long-term financing policy & capital structure.
a. Identify the firm’s most recent long-term financing decision (e.g., debt, IPO, seasoned equity offering, secondary offering). Analyze the economic, business, and competitive background in which the financing occurred, and identify cost and risk trade-offs.
b. Identify your firm’s book value, market value, and levered value according to the M&M model. For a 20 percent increase in assets, perform a quantitative analysis and recommend the optimal capital structure mix for your company. Your analysis should include an estimation of that company’s cost of capital, price per share, and market value of the firm.
Identify a synergistic acquisition candidate – LVMH – LVMH Moet Hennessy Louis Vuitton SA
i. This report should clearly identify the following:
1) Your proposed acquisition terms
2) Price
3) Financing
4) Potential negotiation strategies
ii. Supporting financial data should include the following:
1) Price/earnings ratios
2) Book value
3) Current market value
4) Liquidation
5) Diluted price per share
6) Capital Budgeting tools (NPV, IRR, Profitability index, payback – optional: Discounted Payback and Modified Internal Rate of Return)
Note: Use MS Excel® spreadsheets as support showing your computations where applicable.