FIN 470 CSU Valuation Solution Contingency Plan Worksheet


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There is a case on a company given and an excel sheet provided that has the solution to the case along with suggested answers to the case questions. Attached is the instructions for the project and the solutions from the example. Requirements are to make a copy of the example and adjust accordingly given the instructions/questions in the prompt. Here are the questions:

Using the provided financial statements as a starting point:

  1. The DCF valuation and pro forma financials with five years of forecasted growth rates are provided in the original model. Please modify the model to consider a more successful scenario where Wok Yow’s sales grow at a more aggressive pace of 40% for five years and then flatten to a more sustainable growth rate of 7%. What would the stock value per share be under the new scenario? What kind of strategic changes you would make in the business model to justify the growth assumption? How would you do things differently? You can use fictional events to justify your assumptions.
  2. Prepare and present DCF valuations and pro forma financial statements (five-year explicit period) that justify a $31 and a $56 share price. You can play with the model assumptions to get to these valuations. Propose two different business plans that would be targeting these two different outcomes. Make sure the ratios embedded in your projections conform to reasonable operating ratio assumptions in the models. Also remember that higher risk business strategies come with higher expected returns.
  3. Discuss the $31 and $56 IPO prices for Wok Yow within the context of comparable firms and their multiples. You can use some outside reference materials from companies in similar industries for comparison purposes. Then take a position on whether you would recommend the $31 or $56 IPO. Which one is more feasible? Take a position on which of the two business plans you would invest in as an investor, which financial instrument of the company you would want to invest in and what kind of a return you would expect on your money.
  4. Prepare an executive summary discussing the events and decisions leading to its current situation, the options it currently has moving forward, and your recommendations for Wok Yow’s near future. The events in the summary will be fictional.
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