Solution

Case Solution for Pinkley’s Prospect

Complete Case details are given below :

Case Name : Pinkley’s Prospect

Authors : Gary Clendenen, John O’Neill, Jason Clendenen

Source : North American Case Research Association (NACRA)

Case ID : NA0154

Discipline : Finance

Case Length : 15 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

A small oil and gas operator must make a decision about whether to drill in a particular location for oil. After significant geological research, the operator has narrowed the possible outcomes to four possible scenarios, one of which was a dry hole (no oil), and provided his best estimate of their respective likelihoods. Evaluating the prospect requires making long term estimates of both the rate of decline in oil production from the prospective formation and the likely price of crude oil over the coming two to three decades. The second of these was required since drilling expenses occur in the first year or two, but revenues from the wells was generated as oil was produced over decades. To help students frame the issue of future oil prices, the cases discussed issues related to the future global supply of, and demand for, oil.

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Case Solution for Super 8 Motel- Guelph

Complete Case details are given below :

Case Name : Super 8 Motel- Guelph

Authors : Karim Ismail, Fred Pries

Source : North American Case Research Association (NACRA)

Case ID : NA0160

Discipline : Finance

Case Length : 13 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Dean Ismail, owner and general manager of the thirty-six-room Super 8 Motel located in Guelph, Ontario, was offered $2.9 million for the motel. After managing the motel for nearly twenty years, Dean and his family were faced with the decision to either sell or keep the motel. If they were to sell the motel, Dean would need to determine if the offer of $2.9 million was actually a fair selling price for the property. The decision needs to be made in the face of significant uncertainty in the local market. New hotels planned for the local area will increase the supply of available rooms by more than 80 percent in the next two years. This significant increase in the supply of available rooms could have a significant impact on occupancy rates and room rates and, consequently, on the revenues and cash flows of the Super 8 Motel. Like many owner-managed businesses, the financial statements of the motel reflect personal and corporate planning issues (e.g., salaries that are above market rates, bonuses, and management fees) making it difficult to identify the income and cash flows that are directly related to the motel operations. In addition, sale of this property could affect the value of an adjacent property owned by Dean. Dean has fourteen days to decide whether to accept the offer of $2.9 million for the motel or reject it, retaining the motel and the future cash flows that the motel generates.

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Case Solution for Lockheed Martin’s Acquisition of NationScape, Inc.

Complete Case details are given below :

Case Name : Lockheed Martin’s Acquisition of NationScape, Inc.

Authors : Susan A. White

Source : North American Case Research Association (NACRA)

Case ID : NA0178

Discipline : Finance

Case Length : 21 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Defense is big business, especially for companies like Lockheed Martin. Lockheed Martin, formed in 1995 through the merger of Lockheed Corp. and Martin Marietta, was one of the largest defense contractors in the world, employing about 140,000 worldwide. Lockheed Martin was considering the acquisition of NationScape, Inc., a firm that supports U.S. military readiness, diplomatic and development efforts, and peacekeeping, stabilization and nation building activities in more than 65 countries around the world. The acquisition could increase Lockheed Martin’s overseas defense support operations and expand its capabilities to provide diplomatic and development services to complement its existing defense business. The corporation needed to determine an appropriate price for the acquisition and evaluate whether the acquisition would be a good strategic and cultural fit for the corporation as well.

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Case Solution for New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions

Complete Case details are given below :

Case Name : New York Life Insurance Company: Adjusting the Investment Portfolio to Market Conditions

Authors : Mary Michel, Janet L. Rovenpor

Source : North American Case Research Association (NACRA)

Case ID : NA0213

Discipline : Finance

Case Length : 38 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In January 2007, Gary Wendlandt was concerned about the US economy. As Chief Investment Officer of the New York Life Insurance Company (NYLIC), he was responsible for managing a $147 billion investment portfolio. The US housing market was weakening at a time when financial institutions had significant assets tied up in mortgage-backed securities and collateralized debt obligations. Credit risk spreads were narrowing despite a general easing of underwriting standards. Wendlandt outlined his concerns in a memo to Ted Mathas, NYLIC’s Chief Operating Officer. The question before Wendlandt and his investment management team was how to implement a “quality tilt” strategy. This would require placing more of NYLIC’s new cash flows into safer fixed income products. NYLIC had a responsibility to its policyholders. It was management’s duty to protect the longevity and financial strength of the firm, so that it could continue to pay policyholder claims, distribute payments from annuities, and issue dividends. Wendlandt faced a classic risk/return tradeoff – i.e., lower current interest income to avoid the higher potential risk of capital losses. How should he adjust NYLIC’s investment portfolio?

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Case Solution for Project Finance for Autopistas del Centro

Complete Case details are given below :

Case Name : Project Finance for Autopistas del Centro

Authors : Francisco J. Lopez Lubian

Source : North American Case Research Association (NACRA)

Case ID : NA0266

Discipline : Finance

Case Length : 14 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In late spring 2009, Osvaldo Martínez, Finance Manager at Autopistas del Centro, a private company operating a toll road bypass in Madrid, was analysing with growing concern the financial impact of reduced traffic on its toll road. In 2008, overall freeway traffic in Spain fell by 12%, and the trend did not suggest any improvement in 2009. Mr. Martínez believed the situation to be basically unsustainable. The company’s lenders wanted to renegotiate costs and deadlines, due to the increase in risk of the project. Due to the drop in revenues and operating earnings, the project would need an additional two million euros and the current shareholders refused to agree to all the refinancing of the project coming out of their pockets. Operational and financial improvements would be needed in order for the project to be viable and offer at least a minimal return. The case describes the progress of a project finance operation from its beginnings in 2004, and the situation of the project in 2009 in the face of a crisis and consequent failure to meet the initially expected cash flows. The case offers an excellent opportunity to discuss what to do when a Project Finance fails, analysing the alternative ways of ensuring the project’s viability and profitability.

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Case Solution for Daktronics (E): Dividend Policy in 2010

Complete Case details are given below :

Case Name : Daktronics (E): Dividend Policy in 2010

Authors : Thomas J. Cook

Source : North American Case Research Association (NACRA)

Case ID : NA0240

Discipline : Finance

Case Length : 26 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

In early March 2010, Bill Ritterath, Chief Financial Officer of Daktronics, Inc., was meeting in his office with Jim Morgan, CEO, and Alered (Al) Kurtenbach, Chairman of the Board, about increasing dividend payments to shareholders. Daktronics was the world’s leading supplier of electronic scoreboards, large electronic display systems, and digital messaging solutions for use in sports, transportation and communications. The company had been going through a difficult period the past three years with the downturn in the national economy and the sudden reversal in the company’s operating and financial performance. Sales were projected by security analysts to fall from a high of approximately $581 million in 2009 to an estimated value of $424 million for fiscal year 2010 ending in May [1]. Stock price had also fallen from a high of $38.66 per share on December 1, 2006 to $7.72 per share on March 3, 2010. But with the economy showing some signs of recovering from the recession, Dr. Kurtenbach thought it was time to review Daktronics’ current dividend policy: “We can afford to return some additional cash to shareholders given our confidence that the company is turning around and business is improving.” Cash balances were growing rapidly and the outlook for future cash flows was positive. In making the decision, Dr. Kurtenbach wanted it to be based on an assessment of the company’s current cash position and future cash flow projections: “I don’t want this dividend to reward short- term holders at the expense of our long-term shareholders” Dr. Kurtenbach asked Mr. Ritterath to make a recommendation at the next Board meeting (in four weeks) on a new dividend distribution, including both the amount and form of the distribution.

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Case Solution for An Investment Analysis of Honduran Teak Plantations

Complete Case details are given below :

Case Name : An Investment Analysis of Honduran Teak Plantations

Authors : Lisa F Majure, Kathryn S Savage, Matthew J Haertzen, Alex Finkral

Source : North American Case Research Association (NACRA)

Case ID : NA0282

Discipline : Finance

Case Length : 24 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Matthew Haertzen, a timber portfolio manager for Cogent Partners, the fund manager for Cambium Global Timberland (a UK listed timber investment fund), was tasked with the analysis of a managed teak plantation in Honduras for potential cumulative investment in the amount of $21-25 million. Matt was evaluating an opportunity from Beyond Forestry, a Honduran Company that employed a unique accelerated teak growth model. This accelerated growth model allowed for harvesting of teak wood in as few as 7-12 years, as compared to 20-30 years for traditional commercial plantations. The demand for teak was growing and the supply was dwindling due to significant restrictions regarding the harvest of native teak forests, which traditionally have a very long growth cycle of 70-80 years. The current supply/demand conditions led to a shortage of teak and created an opportunity for investment in companies who could grow teak in an ongoing, sustainable basis with manageable harvest rotations. Mr. Haertzen needed to perform a capital budgeting analysis, including deriving an appropriate risk-adjusted cost of capital, to use in his investment analysis. He obtained data from Beyond Forestry in Honduras including growth rates of managed teak plantations, teak pricing, and operational expenses necessary to estimate cash flows associated with the managed teak plantations. Of equal importance was an assessment of the many risks associated with the teak plantation investment, given the political and economic environment in a developing market such as Honduras.

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Case Solution for Goldman Sachs and the Big Short: Time to Go Long?

Complete Case details are given below :

Case Name : Goldman Sachs and the Big Short: Time to Go Long?

Authors : Randall D. Harris

Source : North American Case Research Association (NACRA)

Case ID : NA0284

Discipline : Finance

Case Length : 30 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

On August 21, 2007, David Viniar, Chief Financial Officer of Goldman Sachs, received an e-mail from a trader in Goldman’s Mortgage Department. In the e-mail, addressed also to Goldman Co-Presidents Gary Cohn and Jon Winkelreid, Joshua Birnbaum outlined a proposal for the firm to move from a net short position in subprime mortgage securities and derivatives to a net long position. Birnbaum claimed that the net long position would not only be profitable but also reduce Mortgage Department and firm-wide risk. This proposal came at a critical time for the subprime mortgage markets in the U.S. and around the world. Subprime mortgage originators such as New Century had filed for bankruptcy. Two Bear Sterns hedge funds that traded subprime mortgages had collapsed. The turmoil had also spread to global markets. Goldman Sachs, unique among New York investment banks, had anticipated the downturn in the subprime mortgage markets and had positioned itself to profit from the meltdown. Now, at a critical juncture, traders on the front lines of the subprime mortgage markets wanted to reverse Goldman’s net short position and go net long. David Viniar knew that the decision to go long could not be taken lightly and would have major implications for the firm, the firm’s overall levels of risk and possibly the firm’s survival. Goldman’s board of directors and key board members had been monitoring the firm’s subprime exposure and would likely want to be consulted regarding such a consequential decision.

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Case Solution for Technology Plus, Inc. – Moving Onward

Complete Case details are given below :

Case Name : Technology Plus, Inc. – Moving Onward

Authors : Susan V. White, Karen Hallows

Source : North American Case Research Association (NACRA)

Case ID : NA0292

Discipline : Finance

Case Length : 21 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Technology Plus was a Virginia IT firm, servicing information technology systems for businesses and government. The firm had grown through acquisition, expanding its technology solution capabilities, areas of expertise, vendor relationships and client bases. In early 2010, the firm was at a crossroads – how far and how fast to expand, how to incorporate prior acquisitions into current operations, and how to obtain financing for continued high growth, whether organic (financed through current earnings), or through additional acquisitions. Decisions about the future of the firm were complicated because the three owners were unable to agree. CEO Ethan Brennan wanted to continue to grow the firm, but was hampered by the inability of his partners to agree on future financing. Founder Gary Hesse was unwilling to put his personal assets at greater risk and vetoed any risky expansions that might require additional collateral. Ethan found his position frustrating enough to consider bankruptcy, selling his portion of the firm, or selling the entire firm.

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Case Solution for Daktronics (B): The Large Sports Venue Sales Channel

Complete Case details are given below :

Case Name : Daktronics (B): The Large Sports Venue Sales Channel

Authors : R. Jeffrey Ellis

Source : North American Case Research Association (NACRA)

Case ID : NA0234

Discipline : Sales

Case Length : 26 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

Description for case is given below :

Daktronics Corporation made score boards and large displays for sports venues. The company had been the “Cadillac” of the industry and commanded nearly 70 percent share of the college and professional sports venue market for large displays. Recently, however, increasingly complex, technological installations and maturing manufacturing processes and sourcing had enabled new players to enter the market. Further, buyers in the large sports venue market had been including consulting firms in the decision process. Where Daktronics had often been the unchallenged choice, they were now being challenged by greater competition and channel influences that threatened both share of market and gross margins. Jay Parker, Daktronics Sales Manager for Large Sports Venues, was trying to understand the new market realities and devise an approach that would maintain Daktronics’ market leadership and profits.

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