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Illustrative Questions - Burton Sensors, Inc.

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22 views1 page

Illustrative Questions - Burton Sensors, Inc.

Uploaded by

Venky
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Case: Burton Sensors, Inc.

Assignment Questions
(Excel Sheets are attached to the case for facilitating valuation)

1. Should Marshall continue to pursue a high-growth strategy? How can she finance it?

2. What is the potential effect of growth on Burton’s stock price?

3. Should Marshall purchase the thermowell machines? In calculating the weighted-average cost of
capital, use 5.8% as the equity risk premium.

4. Should Marshall accept the offer of the private investor and issue new equity? How does the deal
affect Burton’s existing shareholders?

5. What is the effect of the issuance on Burton’s balance sheets?

6. Should Marshall acquire Electro-Engineering, Inc. (EE)? What is the most important consideration?
Even if the NPV of the acquisition is zero, should she still proceed?

7. Does the acquisition allow EE to gain enough funding to invest in the purchase of thermowell
machines?

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