Topic outline

    • This group work accounts for 25% of the course grade. The group work is mandatory.

    • 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.
    • Using this tool you can enrol yourself in a group.

    • Here are some nice examples from Yale MBA students.

    • 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’.

      Trivago logo

    • This exercise accounts for 5% of the course grade.

    • This templete might be helpful when answering the first question.

    • This exercise accounts for 5% of the course grade.

    • Points     Grade

      91-100    5

      81-90      4

      71-80      3

      61-70      2

      50-60      1

      0-49         fail

    • 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.

      Additional information:

      • Choi will put $80,000 cash into the business. This amount represents beginning equity.

      • The 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.

      • Truck depreciation 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.

      • The appropriate discount rate is 10%.

      Required

      How much is the business worth? Use the abnormal earnings approach to valuation. You may use the exercise 3 template.


      Voluntary work


      Calculate the value for different scenarios:


      1. The company makes an impairment write-off of $20,000 in Year 2.

      2. The company makes an impairment write-off of $20,000 in Year 3.

      Hint: make required adjustments for subsequent depreciation.