Teuer Furniture Private Company Valuation

  Incorporate all the answers in your case reports, following the instruction in your syllabus. As members of Jerabek's team, you are responsible for estimating the value of Teuer Furniture using a discounted cash flow approach. Prepare a memo to present to Teuer’s management that details the value of Teuer and the key assumptions underlying your valuation. The memo should specify what Teuer is worth, per share, and why. Support your answers with facts from the case. The following should help guide your analysis: • Construct the pro forma financials. To value Teuer Furniture, the first step is to construct a pro forma income statement and balance sheet. Use the assumptions and data from the case as well as the templates provided. As a check that your numbers are correct, verify that the balance sheet balances. • Value the firm using the DCF method. Value Teuer by constructing the cash flow from assets for the next six years (2013 to 2018) along with the terminal value. Your value should not include the 2012 cash flows. Initialy, assume that the long-term growth rate of Teuer’s cash flows is 3.5% and that the firm’s cost of capital is 12.1%. What is the value of Teuer on a per-share basis? • Evaluate the key assumptions. The value that you calculated is a function of the assumptions made by you and Teuer’s finance team. Do sensitivity analysis, changing the assumptions where you think it is appropriate. Explain and defend your changes – especially those that you find critical to your analysis. Critical assumptions are both empirically relevant (ie., changing the assumption has a non-trivial effect on the answer) and cannot be precisely measured.