Solution

Case Solution for Sterling Household Products Company

Complete Case details are given below :
Case Name :      Sterling Household Products Company
Authors :           William E. Fruhan; Craig Stephenson
Source :             HBS Brief Cases
Case ID :            913556
Discipline :        Finance
Case Length :    12 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Sterling Household Products manufactures and markets a broad line of consumer goods from laundry soap and cosmetics to cleaning, disinfecting, and sanitizing products. The company has many highly regarded brand names and consistently reports impressive sales and profits to the investment community. Despite a record of success, a deeper analysis of financial measures reveals that growth rates for unit volumes, sales, and profits are low. Looking to expand into new markets with strong growth potential, the company considers acquiring the germicidal, sanitation, and antiseptic product unit from Montagne Medical Instruments, a company in the health care industry. This acquisition seems like a natural extension of Sterling’s experience and expertise in the market for household cleaning supplies. Both parties reach a tentative agreement on price and Sterling considers whether the proposed investment adds value given the risks involved. Students must perform a comprehensive investment analysis and examine both the qualitative and quantitative issues associated with evaluating a strategic acquisition before making a final recommendation.
 
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Case Solution for Jackson Automotive Systems

Complete Case details are given below :
Case Name :      Jackson Automotive Systems
Authors :           William E. Fruhan, Wei Wang
Source :             HBS Brief Cases
Case ID :            914505
Discipline :        Finance
Case Length :    06 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Jackson Automotive Systems produces automotive parts for advanced heating and air conditioning systems, engine cooling systems, fuel injection and transfer systems, and various other engine parts, and it supplies them to the automotive industry primarily in Michigan. Like many OEM suppliers for the automotive industry, Jackson cut back production following the financial crisis in 2008. By 2013, the firm is back to operating at capacity. The company experiences a bottleneck in production of some key electronic components and, as a result, is unable to repay its outstanding debt to the bank. In addition, the firm delayed replacing equipment during the downturn and now must replace aging equipment to avoid future production delays. The president approaches the bank for an extension to repay a loan and for an additional loan to cover the new equipment purchase. Before meeting with the loan committee, the president must prepare a presentation on the firm’s financial position.
 
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Case Solution for New Earth Mining, Inc.

Complete Case details are given below :
Case Name :      New Earth Mining, Inc.
Authors :           William E. Fruhan, Wei Wang
Source :             HBS Brief Cases
Case ID :            913548
Discipline :        Finance
Case Length :    12 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
New Earth Mining is one of the largest producers of precious metals in the U.S. While the firm operates mines primarily in the U.S. and Canada, it has also made substantial investments in gold exploration projects in Australia and Chile. New Earth has been very successful and has a large amount of cash on the balance sheet, a simple debt structure, and a reasonable leverage ratio with liquidity risk. With a strong financial position, the firm considers reducing its dependence on precious metals by diversifying into base metals and other minerals. An investment opportunity for mining iron ore in South Africa looks promising but still carries substantial risk. A high risk of civil war in neighboring countries along with strong fears that the South African government will nationalize mining operations combine to create an unstable political environment. The tentative financing package is complex and creates challenges for determining a value for the project. Students must complete a quantitative analysis of 4 proposals with different valuation methods before making a final recommendation.
 
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Case Solution for Larry Steffen: Valuing Stock Options in a Compensation Package

Complete Case details are given below :
Case Name :      Larry Steffen: Valuing Stock Options in a Compensation Package
Authors :           William E. Fruhan; Craig Stephenson
Source :             HBS Brief Cases
Case ID :            914517
Discipline :        Finance
Case Length :    07 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
New MBA graduate Larry Steffen has accepted an attractive job offer from Athena Global Technology but must now choose one of two alternative compensation plans. The first compensation plan option includes a base salary plus a $25,000 cash bonus, and the second includes the same base salary plus employee stock options. In order to evaluate and decide on one of these plans, Larry must estimate the value of the offered stock options and consider several complicating factors, including whether he will remain at Athena for the five-year vesting period necessary to receive the options. This case introduces students to option valuation and facilitates a discussion about the effectiveness and potential benefits and problems associated with the use of stock options in compensation packages.
 
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Case Solution for Newfield Energy

Complete Case details are given below :
Case Name :      Newfield Energy
Authors :           William E. Fruhan; Wei Wang
Source :             HBS Brief Cases
Case ID :            914541
Discipline :        Finance
Case Length :    09 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
In September 2013, Miles Griffin, CEO and chairman of the board of Newfield Energy, prepares to present financial proposals to the board of directors for approval. Newfield (based in Houston, Texas) was a large independent energy company primarily engaged in the exploration, development, and production of crude oil, natural gas, and natural gas liquids. It had experienced declines in earnings and cash flows in recent years because of the decline of natural gas prices and asset write-downs. The proposals to the board, prepared by the CFO, included (1) a press release outlining that the company was planning to divest several natural gas projects immediately, probably at significant book losses; (2) a significant reduction of common stock dividends; and (3) an exchange offer under which the company would exchange up to 20% of its common stocks into newly issued preferred stocks. Griffin was concerned that the breadth and complexity of the proposals might cause investors to worry. This case is ideal for use in first- or second-year MBA courses in corporate finance or capital markets or in a finance course for advanced undergraduates.
 
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Case Solution for Sum of the Parts Valuation: Digital Realty Trust

Complete Case details are given below :
Case Name :      Sum of the Parts Valuation: Digital Realty Trust
Authors :           Erik Stafford; Joel L. Heilprin
Source :             HBS Brief Cases
Case ID :            914529
Discipline :        Finance
Case Length :    19 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Longview Investments, an investor in alternative asset classes, had recently developed a new investment thesis to take advantage of several emerging macroeconomic themes. The strategy was premised on the belief that inflation and interest rates were likely to accelerate in the future and that digital real estate was likely to offer a superior return due to developing trends in technology and IT management. Specifically, the firm noticed greater utilization of cloud-based applications and mobile devices; the increased need for ubiquitous access to digitized data, as well as the explosion in the amount of electronic data generally; and the shifting of firms away from the use of small server closets and toward larger datacenter environments. The net result was a heightened interest in REITs specializing in digital real estate. The case is meant to demonstrate the sum of the parts valuation methodology as a capstone exercise for an introductory finance class in a first-year MBA setting. It follows an investment professional as he develops a hypothesis related to Digital Realty Trust (DLR), a publicly traded REIT specializing in digital real estate.
 
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Case Solution for Paramount Equipment

Complete Case details are given below :
Case Name :      Paramount Equipment
Authors :           Carliss Y. Baldwin, Wei Wang
Source :             HBS Brief Cases
Case ID :            914557
Discipline :        Finance
Case Length :    13 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Paramount Equipment, Inc., based in Fort Wayne, Indiana, is a large manufacturer of cranes and compact construction equipment, aerial work platforms, and food service equipment. Founded in 1987, Paramount now had manufacturing operations in 24 countries. However, it lost its competitive position because it took on too much debt in the form of bank borrowings relative to the risk level of its business. Now the company must seek funding and guarantees in order to restructure its debt. Paramount’s future depends on whether existing lenders, management, and the government of Ontario-where the company employs more than 7,000-can reach a feasible restructuring and refinancing plan fast and whether Paramount was able to secure a capital injection from new investors. Students must determine the optimal capital structure policy consistent with competitive risks and assess available tools for financing a company in financial distress. The case requires students to perform only limited quantitative analysis and is ideal for use in first-year MBA courses in financial strategy or corporate finance. It would also work well in advanced undergraduate finance courses that cover capital structure and financial distress.
 
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Case Solution for Thompson Asset Management

Complete Case details are given below :
Case Name :      Thompson Asset Management
Authors :           William E. Fruhan, John Banko
Source :             HBS Brief Cases
Case ID :            914565
Discipline :        Finance
Case Length :    12 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Thompson Asset Management (TAM) is a small investment advisory and asset management firm in Jacksonville, Florida, with about $100 million in assets under management in two different funds. Since starting the firm in 2009, the CEO and founder Allison Thompson has had a proven track record of beating benchmarks and managing the portfolio’s downside risk. The firm’s typical clients were high-net-worth individuals, and in 2014, Thompson is looking to expand her business by taking on institutional clients as well. She recently met with the investment officer of her alma mater and is considering taking on the university’s endowment fund as a client. For her bid to manage the entire endowment of $20 million, Thompson must create a presentation that outlines her investment strategy. The case is ideal for an MBA-level or undergraduate finance course that covers asset management and/or portfolio theory.
 
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Case Solution for Landmark Facility Solutions

Complete Case details are given below :
Case Name :      Landmark Facility Solutions
Authors :           William E. Fruhan, Wei Wang
Source :             HBS Brief Cases
Case ID :            915527
Discipline :        Finance
Case Length :    08 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
Landmark Facility Solutions presents a situation in which a medium-sized facility management company assesses whether to acquire a larger facility management company that is known for its high-quality services and technical expertise. The acquirer believes the acquisition will help it to become an integrated facility manager and enter new industries in its home market. The case focuses on valuing the acquisition opportunity and choosing the right financing for the transaction. It explores the interaction between corporate investment and financing, and sets the stage for discussions about capital structure decisions. The case can be used in first-year MBA courses in corporate finance and financial strategy or second-year MBA courses in mergers and acquisitions and advanced corporate finance. It also can be used in an undergraduate finance course that covers mergers and acquisitions.
 
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Case Solution for Midland Energy Resources, Inc.: Cost of Capital (Brief Case)

Complete Case details are given below :
Case Name :      Midland Energy Resources, Inc.: Cost of Capital (Brief Case)
Authors :           Timothy A. Luehrman, Joel L. Heilprin
Source :             HBS Brief Cases
Case ID :            4129
Discipline :        Finance
Case Length :    12 pages
Solution sample availability : YES
Plagiarism : NO (100% Original work)
Description for case is given below :
The senior vice president of project finance for a global oil and gas company must determine the weighted average cost of capital for the company as a whole and each of its divisions as part of the annual capital budgeting process. The case uses comparable companies to estimate asset betas for each operating division, and employs the Capital Asset Pricing Model to determine the cost of equity. Students are required to un-lever and re-lever betas and, choose an appropriate risk-free rate, and compute costs of debt and equity.
 
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