Upload your presentation here. You and your group can earn additional 5 points on your course total (please note that this assignment is voluntary). So upload your PowerPoint slides (just few slides) and be prepared to present your research report in the front of the class on Wednesday 3.4. The presentation should be around 10-12 minutes.
This exercise accounts for 5% of the course grade. Please use Trivago Form 20-F (annual report) and other sources to answer the following questions. To find
Trivago’s Consolidated Financial Statements from the annual report (Form 20-F),
click ‘Index to financial statements’.
Judy Choi is thinking about starting a truck rental
business. She plans to buy four trucks now and to then add a fifth truck at the end of the second year. Each truck will cost $20,000. Judy has carefully evaluated the local
market for rental trucks and believes that each truck will generate $5,000 of
net operating cash flow each year. At the end of five years, she believes the
trucks can be sold for $30,000 in total.
will put $80,000 cash into the business. This amount represents beginning
company will pay out all excess cash as dividends each year. The cash needed to
buy the truck in Year 2 will come from operating cash flows that year. No new
investment will be required.
is $3,043.48 per truck per year, which results in the trucks having a book
value of $30,000, the expected salvage value, at the end of Year 5.
appropriate discount rate is 10%.
How much is the business worth? Use the abnormal
earnings approach to valuation. You may use the exercise 3 template.
Calculate the value for different scenarios:
company makes an impairment write-off of $20,000 in Year 2.
company makes an impairment write-off of $20,000 in Year 3.
Hint: make required adjustments for subsequent