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Williams 2002

In: Business and Management

Submitted By kskeego
Words 496
Pages 2
FIN 5312: CORPORATE FINANCE
Spring Semester 2016, Module I
Professor Megginson
January 7, 2016

Questions for case 1: Flash Memory, Inc.

1. Assuming the company does not invest in the new product line, prepare forecasted income statements and balance sheets at year-end 2010, 2011, and 2012. Based on these forecasts, estimate Flash’s required external financing: in this case all required external financing takes the form of additional notes payable from its commercial bank, for the same period.

2. What course of action do you recommend regarding the proposed investment in the new product line? Should the company accept or reject this investment opportunity?

3. How does your recommendation from question 2 above impact your estimate of the company’s forecasted income statements and balance sheets, and require external financing in 2010, 2011, and 2012? How do these forecasted income statements and balance sheets differ if the company relies solely on additional notes payable from its commercial bank, compared to a sale of new equity?

4. As CFO Hathaway Browne, what financing alternative would you recommend to the board of directors to meet the financing needs you estimated in questions 1 through 3 above? What are the costs and benefits of each alternative?

Questions for case 2: Williams, 2002

1. Evaluate the terms of the proposed $900 million financing from the perspective of both parties. How would you calculate the return to investors in this transaction? If you need more information, what information do you need?

2. What is the purpose of each of the terms of the proposed financing?

3. Conduct an analysis of Williams’ sources and uses of funds during the first half of 2002. How do you expect these numbers to evolve over the second half of 2002? What is the problem facing Williams? How did it get into this situation? How has it tried…...

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