Rocky Mountain Advanced Genome (RMAG) Case Study |

The presentation, using the financial analysis from the spreadsheets,

answers the following questions:

**Rocky Mountain Advanced Genome Presentation**

1. Please prepare to explain the implications of case Exhibit1 (Jan’s

first task). Based on this exhibit, is terminal value a material

component of firm value?

2. Drawing on case Exhibit 4 and your own general knowledge,

where would the various estimators be appropriate? (Jan’s

second task).

3. Regarding the cash-flow forecasts in case Exhibit 5, at what point

in the future would you set the forecast horizon for the

three investments? Why? More generally, what should determine

when you stop forecasting annual cash flows and estimate a

terminal value?

4. Please estimate other terminal values based on alternative

estimation. approaches. What is the resulting present value of

cash flows under Big Sur’s and RMAG’s outlook? How significant

was terminal value in creating the difference between the two

present-value estimates?

answers the following questions:

first task). Based on this exhibit, is terminal value a material

component of firm value?

2. Drawing on case Exhibit 4 and your own general knowledge,

where would the various estimators be appropriate? (Jan’s

second task).

3. Regarding the cash-flow forecasts in case Exhibit 5, at what point

in the future would you set the forecast horizon for the

three investments? Why? More generally, what should determine

when you stop forecasting annual cash flows and estimate a

terminal value?

4. Please estimate other terminal values based on alternative

estimation. approaches. What is the resulting present value of

cash flows under Big Sur’s and RMAG’s outlook? How significant

was terminal value in creating the difference between the two

present-value estimates?

Outline of analysis needed to solve case questions:

1. Forecast horizon by industry

2. Discuss why we choose which key terminal value estimators

3. Discuss the forecast horizon for the investment

4. Review terminal value estimations

5. Valuate RMAG

6. Discuss decision

1. Forecast horizon by industry

2. Discuss why we choose which key terminal value estimators

3. Discuss the forecast horizon for the investment

4. Review terminal value estimations

5. Valuate RMAG

6. Discuss decision