You asked: quot;This question requires you, among other things, to calculate the stock price for Yahoo! (YHOO); and provide the needed analysis as…

You asked:”This question requires you, among other things, to calculate the stock price for Yahoo! Inc. (YHOO); and provide the needed analysis as asked in what follows. Here is what you need to do for this question. Using “Sources of Financial Data” listed in Course Content[i] obtain the latest financial info/statements for Yahoo! Inc. (ticker YHOO), also identify its peer companies and obtain pricing and financial information for them. After that answer the following questions: Requirements: A. Develop a DCF model using excel to estimate the fair value of the firm’s common shares (use the data at yahoo.com/finance for your baseline year (2010). Don’t forget to include the terminal value (value after the forecast period, defined as 2011-2018) in your estimate. B. For each of the value drivers (i.e., sales growth and profit margin over the forecast period, tax rate, WACC, fixed and working capital investment rates, WACC), identify your sources and assumptions, and show any calculations. This is especially important for the WACC you will use to calculate the NPV, due to the sensitivity of your results to this critical parameter. C. Using comparable ratios of peer companies, estimate the company’s stock price using relative valuation method. List the major assumptions and sources of information that you used in your calculations. How do you know your assumptions are reasonable enough? Explain. D. How do your DCF and relative valuations compare with the company’s prevailing market price? If they are different, can you briefly forward any possible explanations? If they are not different, can you still justify the price that you arrived at? E. On February 1, 2008 Microsoft announced “that it has made a proposal to the Yahoo! Inc. Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion.” What was the outcome of this bid? Specifically, how did the management and the board react? How did this bid affect the company’s strategy and management? If a potential acquirer were interested in Yahoo today, what would your recommendation be on a per share basis? Is a premium justified?Make sure to justify your responses by using the available data/info and carrying out any needed and relevant calculations. Please help with question. I am not sure how to even start.Thank you.

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