Project #48511 - Corporate financial management

I attached 2 document ( one PDF which is you have to read it all ( its a case study) , the other document is excel where you have to  look at it if you need. Read the case study and answer the 3 questions below: 

JETBLUE AIRWAYS IPO VALUATION

 This case examines the April 2002 decision of JetBlue management to price the initial public offering of JetBlue stock during one of the worst periods in airline history. The case outlines JetBlue’s innovative strategy and the associated strong financial performance over its initial two years. Students are invited to value the stock and take a position on whether the current $25–$26 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. With such a backdrop, students are exposed to one of the well-known finance anomalies—the IPO underpricing phenomenon—and are invited to critically discuss various proposed explanations.

 

The case provides opportunities for the instructor to develop any of the following teaching objectives:

  • Review the institutional aspects of the equity issuance transaction.
  • Explore the costs and benefits associated with public share offerings.
  • Develop an appreciation for the challenges of valuing unseasoned firms.
  • Hone corporate valuation skills, particularly using market multiples.
  • Evaluate the received explanations of various finance anomalies, such as the IPO underpricing phenomenon.

 

Those are the questions you will need to answer: 

Questions

 

  1. What are the advantages and disadvantages of going public?
  1. What discount rate is appropriate for the cash-flow forecast?

(Use the information given in Exhibit 5 to calculate WACC using the book value of debt and market value of equity. Southwest’s Beta and Cost of debt can be used as estimates. The risk-free rate and market risk premium can be found in the case literature). 

  1. How do the growth rates presented in Exhibit 13 compare to the historical growth rates of other low cost providers in Exhibit 8?

Subject Business
Due By (Pacific Time) 11/23/2014 08:00 am
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