SVA Finance Assingment Help With Solution

Shareholder Value Analysis Notes and Exercise

Shareholder Value Analysis (SVA) is one member of the family of techniques for determining the market value of a firm based on the drivers of its projected cash flows. Other cash-based techniques include Cash Flow Return on Investment (CFROI) and Total Shareholder Return (TSR). SVA is superior to other techniques because valuations are derived from explicitly identified or postulated drivers of value in a strategic framework.

SVA starts with fundamental financial theory: the value of an asset is the net present value of its cash flows over the life of the asset. In SVA, the firm is the asset to be valued. One identifies or postulates the drivers of firm cash flows over the life of the firm and integrates the drivers into a model, which generates the estimated free cash flows on a year-by-year basis. Let’s look at the drivers of cash/value.

How it Works

How It works ?

Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id support@assignmentconsultancy.com with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.

Step 2:- While filling submit your quotes form please fill all details like deadline date, expected budget, topic , your comments in addition to product code . The date is asked to provide deadline.

Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id assignmentconsultancy.help@gmail.com and support@assignmentconcultancy.com must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.

Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.

Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.

Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.

Features

Features for Assignment Help

Zero Plagiarism
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.

Relevancy
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.

Three Stage Quality Check
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.

100% Confidential
All our works are kept as confidential as we respect the integrity and privacy of our clients.

Related Services

The following information is given:

• Baseline (last year) sales: $250 million
• Sales growth rates: Base year = 15% with a fade rate of 1% a year for years 1-10: (increasing sales due to sustained competitive advantage and a differentiated product)[source: Strategic Plan]. Fade rate is the rate of decline per year (each year) from a base year.
• Sales growth rate in year 10 and forward: 5% (in year 11, the competition has caught up and the market has reached maturity) [source: Strategic Plan]
• Profit margin: Base year = 20%, with a fade rate of 1% a year for years 1-10: (during the period of competitive advantage, the firm can charge higher prices, but its profit margin slowly declines as competition increases) [source: Strategic Plan]
• Profit margin in year 10 and going forward: 10% [source: Strategic Plan]
• Fixed capital investment rate: 15% (for every dollar of new sales, we need an additional investment in fixed plant and equipment of $.15) [source: historical relationship]
• Working capital investment rate: 9% (for every dollar of new sales we need an additional investment in inventories and receivables of $.09) [source: historical relationship]
• Cash tax rate: 38% [source: historical relationship]
• Cost of capital: 11% [source: current yield on firm’s debt and the cost of equity estimated using the Capital Asset Pricing Model, weighted average based on the target capital structure]
• Marketable securities: $20 million
• Market value of firm’s debt: $50 million
• The firm has 5 million shares of common stock outstanding selling at:
o Scenario 1 = $50/share and
o Scenario 2 = $70/share.

As indicated, the values assigned to drivers link directly to the strategic plan and the associated strategic analysis. In arriving at these estimates strategic alternatives have been evaluated for their value creation potential, with the set of strategies selected that create the most shareholder wealth.

A template has been provided as an attachment — fill in the shaded cells to answer the following four questions:

1. What is the PV of operating cash flows over the competitive advantage period?

2. What is the residual value of the firm after the period of competitive advantage?

3. What is the value of the firm’s equity?

4. Compare the market value of equity ($50/share) with the estimate provided by SVA for scenario

1. What recommendations would you make to top management based on your analysis? Now compare the market value of equity ($70/share) with your SVA estimate. What would you recommend now?

Product Code :Fin219

To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)

You can also email us at assignmentconsultancy.help@gmail.com but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.

Summary