explain how you would quantify the impact of such uncertainties in your analysis

INSTRUCTIONS TO CANDIDATES

ANSWER ALL QUESTIONS

 Titanium Dioxide Case

 1. Given the forecasts provided in the case, estimate the incremental net income and free cash flows associated with each of the two strategies i) Growth Strategy and ii) Maintain Strategy du Pont is considering for the TiO2 market. Use du Pont’s WACC calculated in question #3 below and an estimated growth rate to determine the terminal values for the Maintain & Growth strategies**. Show your calculation of each. (60 pts)

 2. Identify the forecast uncertainties that underly these future cash flows? Explain how you would quantify the impact of such uncertainties in your analysis? (10 pt)

 3. In 1972, bond yields and inflation were approximately as follows:

Long-term Treasuries: 6.2%

AAA Corporate Bonds: 7.2%

BBB Corporate Bonds: 7.8%

Inflation rate (CPI): 3.2%

Assume du Pont’s credit rating in 1972 was “A” as rated by S&P

 Estimate du Pont’s cost of equity, cost of debt & WACC. Outline your methodology and assumptions in determining each of these measures. (10 pt)

 4. Use NPV analysis to determine which strategy is the most attractive? (Hint: once you get incremental cash flows for each strategy, you can determine the present value of the difference between the two and arrive at your recommended course of action). (20 pt)

Attachments:

Related Questions

. The fundamental operations of create, read, update, and delete (CRUD) in either Python or Java

CS 340 Milestone One Guidelines and Rubric  Overview: For this assignment, you will implement the fundamental operations of create, read, update,

. Develop a program to emulate a purchase transaction at a retail store. This  program will have two classes, a LineItem class and a Transaction class

Retail Transaction Programming Project  Project Requirements:  Develop a program to emulate a purchase transaction at a retail store. This

. The following program contains five errors. Identify the errors and fix them

7COM1028   Secure Systems Programming   Referral Coursework: Secure

. Accepts the following from a user: Item Name Item Quantity Item Price Allows the user to create a file to store the sales receipt contents

Create a GUI program that:Accepts the following from a user:Item NameItem QuantityItem PriceAllows the user to create a file to store the sales receip

. The final project will encompass developing a web service using a software stack and implementing an industry-standard interface. Regardless of whether you choose to pursue application development goals as a pure developer or as a software engineer

CS 340 Final Project Guidelines and Rubric  Overview The final project will encompass developing a web service using a software stack and impleme