Homework: Financial Case Study
Below you will find a number of questions that I want you to address in your analysis (approximate % weighting of each question is provided in parentheses).
I. Evaluate Chrysler's past performance. Is there evidence of mismanagement?
a. Evaluate Chrysler's financial and operating performance between 1980-1992. What financial and investment policies did they pursue and why? How successful were they?
b. What should Chrysler's capital structure look like? What payout policies should they pursue? How does that compare with the policies pursued by current management?
II. What is the intrinsic value of a share of Chrysler stock? How does that value compare to the market's valuation?
• When it comes to the capital structure assumptions, one can imagine a number of different alternatives, for example
i. Assume that the firms debt will be kept at some constant amount D.
ii. Assume that Chrysler will follow some specific borrowing and repayment schedule for a number of years, after which the leverage policy will be kept constant.
iii. Evaluate the structure of Kerkorian's proposed deal in detail. Does it make sense? What risks are involved? Use the downturn of 1988-1991 to model another downturn scenario.
Format your homework according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.
Attachment:- Chrysler-Case-Study-Pack.rar