Part 1 – Stock Valuation / Gordon Model Value stock as of 12/31/2019 2 cases, us

Part 1 – Stock Valuation / Gordon Model
Value stock as of 12/31/2019
2 cases, using the required rates of return calculated using CAPM
D1 – 2.69
G – (growth rate) 10.00%
Calculate the theoretical price for Rondo’s common stock using the Gordon Dividend Constant Growth Stock Model. Provide an executive summary discussing the implications of the valuation under the two different case scenarios.
Part 2 – Potential Poly acquisition
Perform analysis as of 12/31/2019
Do corporate DCF valuation
Use Poly’s adjusted NOPAT
Use Rondo’s WACC + 3%
For 3 growth rate scenarios – 4% (Base Case); 2%; and 6%
Calculate
value of operations
value of common equity
value per common share
Calculate implied NOPAT trailing multiples
Calculate premium or discount to market price
Consider/analyze how to finance any offer for Poly
Debt vs. common equity
Max debt possible?
Max common possible?
Refer to Case criteria (e.g., debt/assets; Bill’s minimum ownership requirements; etc.
Use $80 million total asset base
Make recommendation as to whether, or not, to make an offer for Poly, and why. If yes, at what price?