BRAND NEW!!! VERIFIED SOLUTIONS FOR FINANCE CASES

Case Studies in Finance
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8th Edition = =




By Robert Bruner
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Complete Case Studies Solutions Manual
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are included.
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** Immediate Download
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** Swift Response
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** Teaching Notes
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** Excel Files included
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Warren E. Buffett, 2015
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Teaching=Note=




Synopsis=and=Objectives=

, Suggested=complementary=case=about=investment=
owe=
Price=Blue=Chip=Growth=Fund”=
(UVA-F-1772).1==


Set=in=August=2015,=this=case=invites=students=to=assess=Berkshire=Hathaway’s=bid=for=Precision=Castpart
s=Corporation=(PCP).=The=task=for=students=is=to=perform=a=simple=valuation=of=PCP=and=to=consider=the=re
asonableness=of=Berkshire=Hathaway’s=offer.=Student=analysis=readily=extends=to=the=investment=philosophy=
and=the=remarkable=record=of=Berkshire=Hathaway’s=chair=and=CEO,=Warren=E.=Buffett.==

The=case=affords=an=introduction=to=a=finance=course=or=a=module=on=capital=markets.=The=analytical=task
s=are=straightforward=and=intended=to=provide=a=springboard=into=discussion=of=the=main=tenets=of=modern=fi
nance.=Thus=the=case=would=be=useful=for:=

• Setting=themes=at=the=beginning=of=a=finance=course,=including=risk=and=return,=economic=reality=(not=accou
nting=reality),=the=time=value=of=money,=and=the=benefits=of=alignment=of=agents=and=owners.
• Linking=valuation=to=the=behavior=of=investors=in=the=capital=market.
• Modeling=good=practice=in=management=and=investment=using=Buffett=as=an=example=by=returning=to=the=im
age=of=him=repeatedly=during=a=finance=course=to=ask=students=what=Buffett=would=likely=do=in=a=situatio
n.

• Characterizing=intrinsic=value=as=equaling=the=present=value=of=future=equity=cash=flows.
• Exercising=simple=equity-
valuation=skills=by=focusing=on=Buffett’s=investment=philosophy,=basic=principles=of=value=creation,=and=m
ultiples-valuation=information=provided=in=the=case.

• Exercising=more=advanced=equity-
valuation=skills=by=estimating=capital=costs,=a=terminal=value,=and=the=discounted=cash=flow=value=from=inf
ormation=in=the=case=and=teaching=note.=Used=in=this=fashion,=the=case=could=be=positioned=later=in=the=c
ourse=as=a=basic=introduction=to=methods=of=valuing=a=firm.=This




2

could=be=accomplished=by=distributing=this=note=along=with=focused=assignment=questions=(discussed=bel
ow).==


Suggested=Questions=for=Advance=Assignment=



1=Kenneth=M.=Eades=and=Dorothy=Kelly,=“Larry=Puglia=and=the=T.=Rowe=Price=Blue=Chip=Growth=Fund,”=UVA-F-

1772=(Charlottesville,=VA:=Darden=Business=Publishing,=2017).=

,Page== = UVA-F-1769TN=
=


Where=this=case=is=to=be=used=in=an=introductory=class,=the=instructor=could=assign=these=questions=for=advanc
e=preparation=by=the=students:=

1. Who=is=Warren=E.=Buffett?=How=would=you=describe=the=business=of=Berkshire=Hathaway?=
2. How=well=has=Berkshire=Hathaway=performed?=Over=the=long=term?=Recently?==
3. What=is=your=assessment=of=Berkshire=Hathaway’s=investments=in=Buffett’s=largest=equity=positions=show
n=in=case=Exhibit=5?=Has=he=been=uniformly=successful=in=making=major=investments?=
4. Prepare=to=describe=the=elements=of=Buffett’s=investment=philosophy.=How=might=this=philosophy=differ
=from=that=of=other=investment=styles,=such=as=a=very=active=day=trader,=a=chart=watcher,=or=someone=wh

o=passively=invests=in=index=funds?=
5. From=Buffett’s=perspective,=what=is=intrinsic=value?=Why=is=it=accorded=such=importance?=How=is=it=esti
mated?=What=are=the=alternatives=to=intrinsic=value?=Why=does=Buffett=reject=them?=
6. Critically=assess=Buffett’s=investment=philosophy.=Be=prepared=to=identify=points=where=you=agree=and=di
sagree=with=him.=
7. What=is=the=possible=meaning=of=the=changes=in=stock=price=for=Berkshire=Hathaway=on=the=day=of=the=a
cquisition=announcement?=Specifically,=what=does=the=$4=billion=loss=in=Berkshire=Hathaway’s=market=va
lue=of=equity=imply=about=the=intrinsic=value=of=Precision=Castparts=(PCP)?=
8. Should=Berkshire=Hathaway’s=shareholders=endorse=the=acquisition=of=PCP?=

If=the=instructor=chooses=to=engage=the=students=in=a=valuation=exercise=regarding=PCP,=the=following=questio
ns=could=be=distributed=in=advance=along=with=the=supplemental=information=given=in=Exhibit=TN1.=Also,=sp
readsheet=models=for=the=student=(UVA-F-1769X)=and=instructor=(UVA-F-
1769TNX)=support=the=DCF=valuation=work.=

9. Based=on=the=multiples=for=comparable=companies,=what=is=the=range=of=possible=values=for=PCP?=What
=questions=might=you=have=about=this=range?=


10. Please=forecast=and=discount=the=free=cash=flows=to=estimate=the=value=of=PCP.=To=do=this,=you=should=e
stimate=PCP’s=weighted-average=cost=of=capital=(WACC).==
11. Assess=the=bid=for=PCP.=How=does=it=compare=with=the=firm’s=intrinsic=value?=


Suggested=Supplemental=Readings=

As=the=case=indicates,=there=is=a=growing=library=of=books=and=articles=about=Buffett=and=his=investment=st
yle.=The=instructor=may=choose=to=assign=readings=from=one=or=more=of=the=publications=listed=in=Exhibit=T
N2.=Alternatively,=it=may=be=appropriate=simply=to=share=the=list=of=books=with=students=to=illustrate=the=brea
dth=of=scholarship=and=reportage=about=the=Sage=of=Omaha,=Warren=Buffett.=
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