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This case asks the student to compute Procter & Gamble's weighted-average cost of capital to determine whether another company should enter the household-products market; the student must also compute Clorox's cost of capital as a check on the P&G estimate. The case emphasizes the conceptual as well as mechanical aspects of computing cost of capital for a company with homogeneous business risk and stable capital structure.

Supplements the (A) case.

Marvel Entertainment Group is the leading comic book publisher in the United States, with superheros like Spider-Man, the Incredible Hulk, the X-Men, and Captain America. It is also one of the leading manufacturers of sports and entertainment trading cards under the Fleer and Sky Box brand names. In the mid-1990s, it experienced sharp declines in both businesses, causing it to file for bankruptcy in December 1996. This case is set in late January 1997, shortly after Marvel filed its reorganization plan with the bankruptcy court and approximately one month before creditors will have to vote on the plan at the confirmation hearing. Two of the most prominent corporate raiders of the 1980s are pitted against each other for control of the company. On one side is Ronald Perelman, who controls Marvel through his MacAndrews & Forbes holding company. On the other side is Carl Icahn, who controls 25% of Marvel's public debt. Icahn and the other bondholders must decide whether to accept Perelman's plan, to reject it in favor of their own plan, or to sell their bonds before the confirmation hearing. Perelman must decide whether to change the plan in response to the debtholders' threats or to wait and see what happens at the hearing. A rewritten version of another case.

Describes the first major risk financing using catastrophe bonds. Provides a basis for discussing the securitization of insurance risks.

Numeric Investors manages equity portfolios with the use of a momentum model and a value model. The momentum model is based on earnings surprise and analysts' revisions of their earnings estimates. The firm offers long-short as well as long-only strategies, and its approach involves high portfolio turnover. Numeric has experienced rapid growth in assets under management, which has resulted in higher transaction costs. The firm has already closed many of its products to further investment, and needs to decide where to go next. The case provides a rich setting within which to discuss value investing, momentum investing, the efficiency of analysts' earnings estimates, stock market efficiency, long-short investing, transaction costs, the relationship between assets under management and performance, performance fees, and the business strategies of investment management firms.

Spreadsheet Supplement for case 298007

Spreadsheet Supplement for case 298012

Spreadsheet Supplement for case 298017

Spreadsheet Supplement for case 298106

Chase Bank and Chemical Bank intend to merge, producing the largest commercial bank in the United States, the fourth largest in the world. Projected financial benefits under the merger reflect significant planned reduction in operating costs, including 17,000 employee layoffs. Management also expects the merger to produce significant revenue increases as a result of increased economies of scale and scope, and other benefits of size and market leadership. The task of valuing the merger gains, negotiating an acceptable merger price, and implementing the post-merger restructuring is extremely complex.

Explores the development of a new product offering based on the first issuance of "real" bonds in the United States. Looks at a specific organization's efforts to position itself to profit from this market development. Follows naturally from a case on nominal bonds.

Elliot Lebowitz, president and CEO of BioTransplant, must decide on a strategy for this young biotechnology start-up. Among the issues to be resolved are focus of research and search for strategic alliance partners.

Pascal Brandys, founder and CEO of Genset, must decide whether to take this young biotechnology company public. If so, should he do a dual offering in both France and the U.S.? The case also explores the business models in genomics research.

Supplements the (A) case.

Concerns a fictitious airline company and examines the moral hazard situation that results within a firm. Provides an opportunity to discuss corporate governance and contracting under uncertainty.

The manager of Northern Rivers Community and Business Development, must decide whether he will grant a $100,000 loan to the owners of Three Star Food Service Ltd. The owners of Three Star are contemplating the purchase of Crystal Fruit Sales. Crystal's past financial performance, the business conditions, the character of the new owners, capacity to repay and collateral issues must be considered.

Spreadsheet Supplement for case 297108.

John Floegel, a young entrepreneur, is trying to decide whether to join a young, growing daycare franchiser, Tutor Time. Tutor Time has many problems, but also significant potential.

Tutor Time, a young, fast-growing daycare franchiser, needs to undertake an expansion policy. Many options are presented. In addition, Tutor Time must define its franchising policy.

Examines the motivations for franchising. Examines the academic literature in the area and draws implications for franchising patterns. Also provides data on franchising patterns.