Chat with us, powered by LiveChat In addition to the case study the group should prepare a teaching note which will address questions specific to the case. The teaching note will - Writeedu
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08 May In addition to the case study the group should prepare a teaching note which will address questions specific to the case. The teaching note will

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In addition to the case study the group should prepare a teaching note which will address questions specific to the case. The teaching note will include an exercise to identify the value of the acquisition. The acquisition is meant to create synergy values for the combined firm. Below are the steps necessary to complete the teaching note:

1. Perform a DCF analysis of the target, with free cash flow projections for ten years past the merger year and a terminal value = [final projected year free cash flow*(1+cash flow growth rate)]/[discount rate – cash flow growth rate], and compare that with the acquirer offer. You will need to clearly identify any assumptions used when calculating NPV; specifically growth rates, inflation rates, and required return. Present at least two NPV values, one of which utilizes a required return calculated with your version of beta based on three-year monthly returns. 

2. Present alternate strategies for the merger and evaluate the validity and likelihood of those choices.

3. Provide an epilogue to explain what actually occurred with the combined firm or in the case of unsuccessful acquisitions the surviving target. This should include stock market performance post-merger/failed merger. 

T-mobile 2020 Balance sheet

in millions, except share and per share amounts) December 31, 2020 December 31, 2019
Assets
Current assets
Cash and cash equivalents $ 10,385 $ 1,528
Accounts receivable, net of allowance for credit losses of $194 and $61 4,254 1,888
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $478 and $333 3,577 2,600
Accounts receivable from affiliates 22 20
Inventory 2,527 964
Prepaid expenses 624 333
Other current assets 2,496 1,972
Total current assets 23,885 9,305
Property and equipment, net 41,175 21,984
Operating lease right-of-use assets 28,021 10,933
Financing lease right-of-use assets 3,028 2,715
Goodwill 11,117 1,930
Spectrum licenses 82,828 36,465
Other intangible assets, net 5,298 115
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $127 and $66 2,031 1,583
Other assets 2,779 1,891
Total assets $ 200,162 $ 86,921
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 10,196 $ 6,746
Payables to affiliates 157 187
Short-term debt 4,579 25
Deferred revenue 1,030 631
Short-term operating lease liabilities 3,868 2,287
Short-term financing lease liabilities 1,063 957
Other current liabilities 810 1,673
Total current liabilities 21,703 12,506
Long-term debt 61,830 10,958
Long-term debt to affiliates 4,716 13,986
Tower obligations 3,028 2,236
Deferred tax liabilities 9,966 5,607
Operating lease liabilities 26,719 10,539
Financing lease liabilities 1,444 1,346
Other long-term liabilities 5,412 954
Total long-term liabilities 113,115 45,626
Commitments and contingencies (Note 18)
Stockholders' equity
Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,243,345,584 and 858,418,615 shares issued, 1,241,805,706 and 856,905,400 shares outstanding — —
Additional paid-in capital 72,772 38,498
Treasury stock, at cost, 1,539,878 and 1,513,215 shares issued -11 -8
Accumulated other comprehensive loss -1,581 -868
Accumulated deficit -5,836 -8,833
Total stockholders' equity 65,344 28,789
Total liabilities and stockholders' equity $ 200,162 $ 86,921

Sprint 2019 Balance Sheet

2019 2018
(in millions, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents $ 6,982 $ 6,610
Short-term investments 67 2,354
Accounts and notes receivable, net 3,554 3,711
Device and accessory inventory 999 1,003
Prepaid expenses and other current assets 1,289 575
Total current assets 12,891 14,253
Property, plant and equipment, net 21,201 19,925
Costs to acquire a customer contract 1,559 —
Intangible assets
Goodwill 4,598 6,586
FCC licenses and other 41,465 41,309
Definite-lived intangible assets, net 1,769 2,465
Other assets 1,118 921
Total assets $ 84,601 $ 85,459
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 3,961 $ 3,409
Accrued expenses and other current liabilities 3,597 3,962
Current portion of long-term debt, financing and capital lease obligations 4,557 3,429
Total current liabilities 12,115 10,800
Long-term debt, financing and capital lease obligations 35,366 37,463
Deferred tax liabilities 7,556 7,294
Other liabilities 3,437 3,483
Total liabilities 58,474 59,040
Commitments and contingencies
Stockholders' equity:
Common stock, voting, par value $0.01 per share, 9.0 billion authorized, 4.081 billion and 4.005 billion issued at March 31, 2019 and 2018 41 40
Paid-in capital 28,306 27,884
Accumulated deficit (1,883 (1,255
Accumulated other comprehensive loss (392 (313
Total stockholders' equity 26,072 26,356
Noncontrolling interests 55 63
Total equity 26,127 26,419
Total liabilities and equity $ 84,601 $ 85,459

DCF Analysis

(in millions) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue
Cost of Goods Sold
SG&A
Depreciation
Net Working Capital
Net PPE
EBIT
Less Taxes (21%)
NOPAT (EBIT*(1-T))
Investments

WACC Calculate

Risk Free Rate (30-Year Treasury Yield) 1.29%
Beta -0.89
Market Risk Premium 5.60%
Cost of Equity (K)
Market Value of Equity
Market Value of Debt
Enterprise Value (E+D)
Cost of Equity
Cost of Debt
Tax Rate 21%

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