Solution Library

Case Study New England Airlines

Question

Case Study: New England Airlines

Read the case study and answer the following questions.

1. Your first task is to consider NEAir from the perspective of its current owners.

a. What WACC would you use in a discounted cash flow valuation of NEAir?

b. What is the value of NEAir to its current owners? Please express your answer as NEAir’s market capitalization, i.e. the total market value of equity (not a per-share value).

2. Now consider NEAir from the perspective of IAI.

a. What WACC would you use in a discounted cash flow valuation of NEAir from IAI’s position as a foreign acquirer?

b. What is the value of NEAir to IAI with and without the projected synergies. Note that this should be a €-based valuation (hint: forward rates). Please express your answer as NEAir’s market capitalization, i.e. the total market value of equity (not a per-share value). Discuss any assumptions you made along the way and SHOW ALL WORK in your spreadsheet exhibit.

3. Given your results from questions 1 and 2, what do you recommend as a bidding strategy for IAI (in terms of your minimum and maximum bid)? Would your strategy change if you knew there were numerous potential bidders interested in NEAir?

Summary

The question belongs to Finance and it discusses about the case study New England Airlines. Questions about this case study have been answered in detail.

Total Word Count 246

Download Full Solution

Comments

  • HWA
    Rasha

    this is a very good website

  • HWA
    maani

    I have 50 questions for the same test your page is showing only 28

  • HWA
    joeanne

    hi can you please help or guide me to answer my assignments. thanks

  • HWA
    joeanne

    hi can anyone help or guide me to my assignments. thanks

  • HWA
    Monik


  • HWA
    Cristina

    This solution is perfect ...thanks

  • HWA
    Janete

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA
    Sandeep

    Perfect bank of solution. 

  • HWA
    Oxana

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA
    Giuseppe

    works fine.