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This note introduces the student to the dynamics of the hostile takeover setting and characterizes the decision problem as a "game." In this context, it is necessary to understand other players and their modes of thought, defensive tactics, and rules (laws and court precedents) by which players compete. The survey covers these considerations and discusses the probabilistic analysis by which players can assess the possible actions of various parties. The paper was prepared to supplement case discussions on hostile takeovers.

Spreadsheet for case UV2282

In the late 1990s, the National Railroad Passenger Corporation (Amtrak) faced a rude awakening as Congress stipulated that it eliminate its reliance on federal subsidies by 2002. In response, Amtrak drew up a plan for self-sufficiency, the centerpiece of which was a new high-speed passenger service that, it was hoped, would boost revenue enough to make Amtrak self-sufficient by 2002. To run this new service, Amtrak needed to purchase $750 million worth of new locomotives and train sets in 1999. Three alternatives were available for funding the purchase: debt financing, lease financing, or reliance on federal sources. The case opens with Amtrak's CFO instructing her staff in April 1999 to review a leveraged-lease proposal that has just been submitted by BNY Capital Funding LLC. The objectives of the case are to introduce students to financial leases as a financing alternative, explore the lease-versus-buy decision and the conditions under which financial lease arrangements make sense, and exercise skills in the valuation of financial leases.

In this B case, designed to follow F-1339, the money manager sees that Corning has lowered its forecast for the second time that year. As she reviews the updated valuation she did on the convertible bonds, she wonders if she should sell or continue to hold on to them.

Student spreadsheet for case UV0014.

In January 2001, the senior management committee of this company has to decide which major projects should be funded for implementation by the company starting in 2001. The board of directors arbitrarily set a limit of (euros) EUR120 million to be spent on capital projects in 2001. Various managers, however, have proposed projects totaling EUR316 million. The task for the student is to evaluate the completed discounted cash flow (DCF) analyses presented along with qualitative factors (mainly strategic considerations and internal politics of the company), and to choose the projects to be approved.

Spreadsheet for case UV2402

Spreadsheet for case UV2495

A new director of this small German brewery must prepare to vote on three issues coming before the board of directors the next day: (1) approval of the financial plan for 2001, (2) declaration of the quarterly dividend, and (3) adoption of an incentive-compensation plan for the marketing manager. The task for students is to evaluate the past and prospective financial performance of the company and to critique its liberal credit and inventory policies.

Spreadsheet for case UV2168

Spreadsheet for case UV2314

Introduces the weighted average cost of capital (WACC). Provides a WACC calculation, although it has been intentionally designed to mislead students. Thus, their task is to identify and explain the "mistakes" in the analysis, which are intended to highlight conceptual issues regarding WACC and its components. Such issues are often misunderstood by students. Assumes that students have been exposed to the WACC, CAPM, the dividend discount model, and the earnings capitalization model.

These two cases consider the capital investment decisions to be made by executives of this large chemicals firm in January 2001. The 'A' case presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The 'B' case reviews the same project but from one level higher, where the executive faces an either/or investment decision between two mutually exclusive projects. The objective of the two cases is to expose students to a wide range of capital-budgeting issues which includes, among others, the identification of relevant cash flows, the critical assessment of a capital investment evaluation system, the classic "cross-over" problem, in which project rankings disagree on the basis of net present value (NPV) and internal rate of return (IRR), and the assessment of real option value latent in managerial flexibility to change operating technologies.

These two cases consider the capital investment decisions to be made by executives of this large chemicals firm in January 2001. The 'A' case presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The 'B' case reviews the same project but from one level higher, where the executive faces an either/or investment decision between two mutually exclusive projects. The objective of the two cases is to expose students to a wide range of capital-budgeting issues which includes, among others, the identification of relevant cash flows, the critical assessment of a capital investment evaluation system, the classic "cross-over" problem, in which project rankings disagree on the basis of net present value (NPV) and internal rate of return (IRR), and the assessment of real option value latent in managerial flexibility to change operating technologies.

These two cases consider the capital investment decisions to be made by executives of this large chemicals firm in January 2001. The 'A' case presents a go/no-go project evaluation regarding improvements to a polypropylene production plant. The 'B' case reviews the same project but from one level higher, where the executive faces an either/or investment decision between two mutually exclusive projects. The objective of the two cases is to expose students to a wide range of capital-budgeting issues which include, among others, the identification of relevant cash flows, the critical assessment of a capital-investment evaluation system, the classic "cross-over" problem, in which project rankings disagree on the basis of net present value (NPV) and internal rate of return (IRR).

Students assume the role of adviser to Anita Roddick, the managing director of The Body Shop, and prepare a three-year forecast of the firm's income statement and balance sheet. Introduces percentage-of-sales forecasting, and walks students through the preparation of a simplified forecast, first using pencil and paper, then a spreadsheet program on a personal computer. Emphasizes the importance of being able to talk plainly about one's financial forecast and the insights that are of use to the general manager.