We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Conduct a multiples analysis to value Sun Essay Sample

essay
The whole doc is available only for registered users OPEN DOC

A limited time offer!

Get a custom sample essay written according to your requirements urgent 3h delivery guaranteed

Order Now

Conduct a multiples analysis to value Sun Essay Sample

What economic fundamentals are reflected in the multiples? When conducting DCF with perpetuity the risk free rate is used as the growth rate to calculate TV of Sun microsystems. When conducting DCF with multiples we use the median of the debt to equity ratio of comparable companies to come up with the EBIT exit multiple to calculate the TV of sun Microsystems. Based on the information above one might think that using the multiples approach may be the correct way to value Sun Microsystems. However using multiples in this situation may be inaccurate to calculate TV for Sun Microsystems, because the companies being used to compare to Sun Microsystems are in a lot better off financially than Sun Microsystems such as Intel; thus overvaluing Sun Microsystems.

If a competing bidder appears, how high a price should Oracle be willing to offer? Based on the calculations made by forecasting the value of Sun Microsystems post absorption by oracle it was noticed that the price offered by Oracle to Sun Microsystems left a lot of room for negotiations assuming additional bidders appear. For both the DCF with Perpetuity TV and Multiples TV predict/portray a value surpassing the $9.50 offer. However the question on how high should Oracle be willing to offer will depend on Oracles management’s desire of return is. Theoretically the price offered by Oracle should remain from $9.50 PS to $14.45 PS. See Excel Spread Sheet attached for calculations.

We can write a custom essay

According to Your Specific Requirements

Order an essay
Get Access To The Full Essay
icon
300+
Materials Daily
icon
100,000+ Subjects
2000+ Topics
icon
Free Plagiarism
Checker
icon
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access
immediately?

Become a member

Your Answer Is Very Helpful For Us
Thank You A Lot!

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?

Can't find What you were Looking for?

Get access to our huge, continuously updated knowledge base

The next update will be in:
14 : 59 : 59
Become a Member