Virgin America Inc.Case Study Analysis Help With Solution

Posted on February 9, 2017

Virgin America Inc Case Study Analysis Help With Solution

 

Valuation of Virgin America Inc.This problem requires you, among other things, to estimate the stock price for Virgin America Inc. (Ticker: VA), and provide the analysis as requested. You will need to use “Sources of Financial Data” listed in Course Content to obtain the necessary financial info/statements for Virgin America Inc., to identify its peer companies and to obtain pricing and financial information for them.

 

A. Choose several peer companies for Virgin America Inc. and justify your choice. Choose several valuation multiples and using comparable ratios of peer companies and Virgin America Inc. financial information from prospectus, estimate the company’s equity value on April 3, 2016. It is required for this question to list your major assumptions and properly reference sources of information that you used in your calculations.
 
B. Using the same peers and industry data, please estimate Virgin America Inc.’s WACC. Show all your data used for calculations. Again, please state all your assumptions and sources of information.
 
C. On April 4, 2016 Alaska Air Group Inc. (Ticker: ALK) announced its intent to buy Virgin America Inc. How do your valuations compare to the Alaska Air Group Inc. announced acquisition price? If your valuations differ from observed prices, can you briefly forward any possible explanations? For example, you should discuss and attempt to evaluate possible synergy and other effects of acquisition.
 

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


 
D. The following information is for pedagogical purposes only and unlike earlier questions does not deal with real terms of the deal. In July 2015 Virgin America and ViaSat (Ticker: VSAT) announced a Joint Venture (JV) to provide Wi-Fi service on-board. ViaSat has invested $ 5 M in the venture in return for 10% ownership in the form of convertible preferred shares. By July 2016 JV is expected to generate $ 5 M in revenues with subsequent 25% annual growth. ViaSat anticipates to sell its share in JV in July 2019. Applying Value/Sales ratio of 16, what is the estimated 2019 value of ViaSat share in JV? What is the ViaSat’’s implied cost of capital that justified the $ 10 M investment? How would your answers change if the annual growth were only 20%? What is the advantage of having convertible preferred instead of common equity?
 
E. The following information is for pedagogical purposes only and unlike earlier questions does not deal with real situation. There are rumors that Virgin America is negotiating a three year agreement with Amazon (Ticker: AMZN) according to which Virgin America will have a right to stream Amazon Prime content on its flights at a predetermined annual price of $ 50 M. Currently Virgin America uses Netflix (Ticker: NFLX) streaming and pays $ 40 M annually, but each year this value can go up 20% or down 10% in comparison with the previous year. Over the next three years at the beginning of each year Virgin America can decide, which provider, Netflix or Amazon Prime, it will be using that year. Which product should the company use each year? If the risk-free rate is 3%, how much this agreement is worth to Virgin America? Please provide as many details as possible in your explanations and support them by numbers. Hint: think about this as a series of options. Also you might find the following option pricing formulas useful (r is the risk-free rate, p is the risk-neutral probability, Cn is the option payoff in node n)
 

Product Code :Case16

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
User Rating
5 based on 1 votes
URL