FINANCIAL MANAGEMENT (10 to 15 Pages) Due date Tuesday (05/05/2015) at 06:30 NO PLAGRISM. Included Calculation

INTERMEDIATE FINANCIAL MANAGEMENT

FIN 362 B – SPRING 2015

FINAL EXAMINATION INFORMATION

The final examination will consist of a comprehensive case from a text titled CASES IN FINANCE, by Robert F. Bruner. The case is titled Brown-Forman Distillers Corporation. I have put on Blackboard the case, the author supplied spreadsheets and the additional questions that are required to be answered. Note that the additional questions are on page two of this document.

The original Brown-Forman Distillers Corporation case comes from an earlier edition of the Bruner text, it is not found in our present edition of the text book. The case being a classic amongst valuation cases is available on line at their updated, for the new textbook, website. The case has been further updated by Robert F. Bruner and was last revised on 04/02.

The case and the spreadsheets, which can be downloaded from Blackboard.

As per the course syllabus, the case is to be completed, as a group project, with a single written case turned in by 6:00 PM, Wednesday, May 6, 2015. This can be turned in earlier to my office or my mail box. Late papers will not be accepted, so plan accordingly.

The written final examination should be a group effort with each member making a contribution. In addition, no discussion of the case outside of the group or information developed by other groups should be used. Assumptions should be clearly stated if you feel that they are necessary, there are no omissions in this case, so any assumptions should not be necessary.

Please document and footnote all sources of information used as part of your solution, thus footnoting is required. It is very important that you turn in professional work as this final exam accounts for 15% of the grade for the course.

The length of the written final examination case can vary greatly, but counting exhibits the average is 10-15 pages.

Please see the second page for additional questions that must be answered for this case.

In addition to the case format, used from the Harrington text, that we used for most of our cases, both written and oral, address the following questions: (Note: We referred to this approach as the Macro and Micro approach in our discussion.)

Lastly, our Brigham textbook and the Bruner case book will be useful in helping to answer some of these questions, please footnote where appropriate for the material you take from these texts.

Note: Do not answer just these questions!!!!!!!!!!!!!!

1. What are the various approaches available for valuing Southern Comfort Corporation?

2. Based upon the DCF valuation approach (present value) should Brown Forman buy Southern Comfort at the asking price of $94.6 million?

3. The case states that Brown-Forman applies a discount rate of 14% (this is the WACC or required rate of return) to the evaluation of new projects. Based on qualitative information and quantitative analysis is this 14% rate correct?

4. Irrespective of your answer to Question #2, discuss why the acquisition target (Southern Comfort) fits Brown-Forman’s strategic needs.

5. Lastly, what price should Brown-Forman offer Southern Comfort? Discuss what the likely reaction will be by Southern Comfort to negotiate to a lower price.