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1 – 10 of over 2000
Case study
Publication date: 31 August 2021

Elikplimi Komla Agbloyor, Frank Kwakutse Ametefe, Emmanuel Sarpong-Kumankoma and Vera Fiador

After completing this case, students should be able to: identify and compute relevant cash flows in relation to a real estate project and compute the net present value (NPV)…

Abstract

Learning outcomes

After completing this case, students should be able to: identify and compute relevant cash flows in relation to a real estate project and compute the net present value (NPV). Determine the target return or cost of capital (by looking at historical economic indicators). Design or formulate a sensitivity analysis to determine the drivers of the project value. Evaluate real estate and other investments taking qualitative and quantitative factors into consideration. Demonstrate the computation of a break-even rate to determine the minimum or maximum revenue or cost required for a project to be viable.

Case overview/synopsis

This case study is about the Golden Beak Securities Pension Fund that wanted to invest in a Hostel Project in one of the universities in Ghana. Most universities in Ghana faced an acute shortage of on-campus accommodation. Also, the Government of Ghana, in 2017, implemented a programme to make Senior High School in Ghana free. This was expected to increase the number of students who will enter the existing universities. The project was therefore seen as strategic, as it would help ease the pressure of on-campus accommodation while providing diversification for the pension fund. As part of the investment committee’s (IC) quest to improve the skill set available to it, especially in relation to real estate investments, Esi Abebrese was appointed as one of the members of the IC of GSB. Her main task was to collect information on key macroeconomic variables, as well as granular information on project costs and revenues and conduct investment appraisal. Esi was scheduled to make a presentation to the IC on the 15th of October 2019 following which the Committee will debate and make a decision. The project had an estimated cost of GH¢52m with a total number of 3,424 student beds and ancillary facilities. Undertaking the project required moving funds from investments in money market securities with one of the banks in Ghana. The investments in the money market securities were currently yielding about 16% a year. The determination of the cost of capital was critical and Esi and Nana eventually settled on a long-term weighted average cost of capital of 14%. This was after considering the trend of inflation, monetary policy rates, treasury rates, stock market returns and a report on returns on commercial real estate properties in Ghana. An exit capitalisation rate of 20% was also estimated for the purposes of determining the value of the property at the end of the investment horizon. Esi also obtained estimates of cost and revenue for the project and proceeded to carry out a feasibility analysis on the project. This consisted of an NPV analysis and sensitivity analysis on various factors to determine the drivers of the project value. The IC had to take several factors (both quantitative and qualitative) into consideration before making a decision. Esi believed that these factors included the diversification of the fund’s assets, the return on investment, potential oversupply of hostel accommodation, the social responsibility of providing student accommodation and the impact of any prolonged shutdown of the university.

Complexity academic level

Masters/advanced undergraduate.

Supplementary materials

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Subject code

CSS 1: Accounting and Finance.

Details

Emerald Emerging Markets Case Studies, vol. 11 no. 2
Type: Case Study
ISSN: 2045-0621

Keywords

Case study
Publication date: 20 January 2017

Mark Jeffery, H. Nevin Ekici, Cassidy Shield and Mike Conley

Examines the lease vs. buy decision for investments in technology. Addresses pivotal investment decision issues such as varying the length of the lease, the useful life of the…

Abstract

Examines the lease vs. buy decision for investments in technology. Addresses pivotal investment decision issues such as varying the length of the lease, the useful life of the equipment, and alignment with the company's overall financial strategy. The scenario is for a real financial services firm that has been disguised for confidentiality reasons. Presents an investment decision: should a company buy or lease technology with a relatively short useful life? The new controller at AMG, a Fortune 500 financial services firm, has been tasked with determining how to finance the acquisition of 7,542 new PCs to be rolled out over the next 12 months. This is a $6.7 million investment decision and the rollout schedule adds significant complexity to the solution. The controller must choose between buying or leasing the computers over 24- or 36-month time frames. Provides a framework for analyzing similar investment decisions. The key learning point is that leasing information technology can be cheaper than buying. This is contradictory to a car lease, which may be familiar from everyday experience. A new car has a potentially long useful life and can retain significant value after several years, hence, intuition is that buying should always be cheaper than leasing. Shows that this is not the case for information technology. Teaches the correct application of the mid-quarter convention within MACRS depreciation for technology, and the implications of operating vs. capital leases and off-balance-sheet financing. In the process, introduces the four tests for a capital lease. Finally, shows how creative analysis techniques can be used to simplify complex decisions. These techniques aid in arriving at a conclusion faster and with less effort.

To illustrate the fundamentals of lease vs. buy decisions in technology and how they differ from the typical capital equipment lease vs. buy decision. Topics covered include MACRS depreciation and off-balance-sheet financing for a complex leasing scenario staggered in time across multiple business units.

Details

Kellogg School of Management Cases, vol. no.
Type: Case Study
ISSN: 2474-6568
Published by: Kellogg School of Management

Keywords

Case study
Publication date: 1 January 2011

Hela Miniaoui

Islamic financial instruments, financial analysis, financial decision making.

Abstract

Subject area

Islamic financial instruments, financial analysis, financial decision making.

Study level/applicability

Undergraduate Finance and Business.

Case overview

This case highlights the financial decision making by the UAE Islamic Bank, regarding an investment with Towers company. It focuses on considering the appropriate Islamic mode of financing and computing the relevant financial ratios to make the right decision.

Expected learning outcomes

This case can be used to teach Islamic financial instruments, financial analysis and financial decision making.

Supplementary materials

A teaching note is available on request.

Details

Emerald Emerging Markets Case Studies, vol. 1 no. 1
Type: Case Study
ISSN: 2045-0621

Keywords

Case study
Publication date: 20 January 2017

Susan Chaplinsky, Robert S. Harris and Dorothy C. Kelly

Alice Handy, an investment professional with 30 years' experience as head of the University of Virginia Investment Management Company, has opened a new asset management firm…

Abstract

Alice Handy, an investment professional with 30 years' experience as head of the University of Virginia Investment Management Company, has opened a new asset management firm targeted at midsize endowments and nonprofit institutions in January 2004. Her business, Investure, LLC, offered outsourced investment services to institutions with $150 million to $1 billion in assets and access to top-performing managers at lower cost than a fund of funds (FoF). Smith College, a prestigious liberal arts college with a nearly $1 billion endowment, is interested in increasing its current allocation to private equity. Handy and her partner are preparing to meet with Smith's trustees in an attempt to win Smith College as Investure's first client. The case presents three different approaches to private equity investing: direct investment through a traditional limited partnership, investment through a FoF, or investment through Investure's outsourced model. The class discussion presents an opportunity to evaluate advantages and shortcomings of each approach, introduce key terminology, and discuss the current trends in the private equity market. Students are given the cash inflows and outflows for a representative investment in a venture capital fund of the type Handy hopes to invest in on behalf of Smith College. The main analytical task requires students to evaluate the expected gross and net returns generated by the representative investment under each of the different approaches and fee structures.

This case was written for an early class in courses on entrepreneurial finance, venture capital, or private equity. It can also be used in specialized courses for fund trustees interested in alternative assets.

Details

Darden Business Publishing Cases, vol. no.
Type: Case Study
ISSN: 2474-7890
Published by: University of Virginia Darden School Foundation

Keywords

Case study
Publication date: 18 December 2018

Pushpender Kumar and Vijaya Sherry Chand

O.P. Sharma, Convener, Provident Fund (PF) Committee, Kirori Mal College, had to re-invest the amount to be received after the maturity of fixed deposits (FD) in Canara Bank…

Abstract

O.P. Sharma, Convener, Provident Fund (PF) Committee, Kirori Mal College, had to re-invest the amount to be received after the maturity of fixed deposits (FD) in Canara Bank, maturing on July 12, 2018 (INR 5.88 cr.) and on July 14, 2018 (INR 6.70 cr.). He wanted to reinvest the funds in bank FDs for more than a year but less than two years to earn the maximum interest possible, since the current market interest rate trends indicated a severe downfall of interest rates in the near future, but Ram Saran, Section Officer of the College, wanted to reinvest this money for less than one year since there would be a requirement of funds in the short term. However, given Saran's views, O. P. Sharma had to convince the committee members about the feasibility of his proposal for two-year FDs. The case will enable participants to identify the components of a financial investment decision making, investment analysis, evaluation of options and recommendation with the decision of investment plan.

Details

Indian Institute of Management Ahmedabad, vol. no.
Type: Case Study
ISSN: 2633-3260
Published by: Indian Institute of Management Ahmedabad

Keywords

Case study
Publication date: 16 March 2022

Rohan Mohanty and Biraj Kumar Mohanty

The case intends to achieve the following objectives with the audience: Apply the knowledge of fundamental analysis to select good companies for investment; analyse companies for…

Abstract

Learning outcomes

The case intends to achieve the following objectives with the audience: Apply the knowledge of fundamental analysis to select good companies for investment; analyse companies for investment through the contrarian strategy; and appreciate the need of own research before investing.

Case overview/synopsis

This case study provides an insight into the general process around investment for a retail investor. The protagonist of the case, Rajdeep Sharma, is a middle-class, salaried IT consultant from India. He has taken inspiration from Rakesh Jhunjhunwala, a renowned investor in India, and started his journey on the road to generate wealth. He decides to adopt the contrarian strategy and identifies Jaiprakash Associates Limited (JPA) to invest his savings. JPA is a large conglomerate with decades of experience, which has diversified business across multiple sectors. However, JPA’s pursuit of growth and expansion has created financial issues because of a large amount of debt it has amassed over the past few years. The company has been unable to repay its interest and principal obligations to the debt holders, making it consider a restructuring plan to meet these responsibilities. Meanwhile, Rajdeep has been optimistic about his investments but must experience excessive turmoil due to the high volatility in the company’s share prices. The case highlights the value of sound analysis, along with the impact of information on retail investors’ decision-making process. It will help prospective investors appreciate the importance of economic, sectoral and financial statement analysis before making any investments.

Complexity/academic level

Fundamental analysis for MBA students majoring in Finance.

Supplementary materials

Teaching notes are available for educators only.

Subject code

CSS 1: Accounting and Finance.

Details

Emerald Emerging Markets Case Studies, vol. 12 no. 1
Type: Case Study
ISSN: 2045-0621

Keywords

Case study
Publication date: 5 August 2022

Pervin A. Gandhi and Sujo Thomas

The case proposes a discussion of the time value of money and capital budgeting concepts, including determining the effective overall cost of capital, estimating working capital…

Abstract

Research methodology

The case proposes a discussion of the time value of money and capital budgeting concepts, including determining the effective overall cost of capital, estimating working capital requirements, consideration of all relevant cash flows – including opportunity costs, finding the present value of future cash flows (annuities and lump-sum cash flows) by linking the concepts of weighted average cost of capital and working capital and net present value (NPV) and internal rate of return (IRR).

Case overview/synopsis

Jehan Wadia, a newly appointed finance manager of Tembo Global Industries Ltd., is facing a dilemma in recommending an investment decision to Mr Variava, Chief Finance Officer. Implementation of the project requires an investment of INR 82m. Ms Stella, funding division head, proposed financing through equity and term loans in the proportion of 3:2, respectively. Mr Shrinivasan, handling the short-term financial needs of the firm, suggested a finance mix having a higher weight-age of debt. Mr Variava desires to maximize the wealth by taping the opportunity. The case is written for an experience in the capital budgeting dichotomy faced by managers in real-life situations.

Complexity academic level

This case can be used in various contexts – as a preparatory case in a foundation course of Financial Management at the graduate level to instill the fundamentals for evaluating long-term investment decisions or in courses of Strategic Financial Management or Corporate Finance at the undergraduate or graduate level as a capstone case to reinforce the application of multiple concepts in strategic financial decision making.

Details

The CASE Journal, vol. 18 no. 6
Type: Case Study
ISSN: 1544-9106

Keywords

Case study
Publication date: 26 April 2018

Stephanie Giamporcaro and Marilize Putter

The case presents a responsible investment dilemma case. Swedish institutional responsible investors have to make a choice about their investment in Lonmin, a platinum mining…

Abstract

Subject area

The case presents a responsible investment dilemma case. Swedish institutional responsible investors have to make a choice about their investment in Lonmin, a platinum mining company whose operation are located in South Africa and has been the theatre of workers’ killings.

Study level/applicability

The case targets MBA students and can be taught in a corporate finance course, a corporate governance course, a business ethics course or on sustainable and responsible investment.

Case overview

The teaching case follows the journey of Hilde Svensson, the head of equities for a Swedish responsible investor. She has been tasked to visit the site of Lonmin in South Africa which is the theatre of a tragic workers’ unrest that led to the killings of 44 workers in August 2012. She must decide what the best responsible investment strategy is to adopt with Lonmin for the future.

Expected learning outcomes

The students are expected to learn about what responsible investment entails and the dilemmas that can be faced by responsible investors. The case also gives insight to business students and the complexities of environment, social and governance (ESG) analysis and how to integrate financial and ESG analysis when you are a responsible investor.

Supplementary materials

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Subject code

CCS 1: Accounting and Finance

Details

Emerald Emerging Markets Case Studies, vol. 8 no. 2
Type: Case Study
ISSN: 2045-0621

Keywords

Case study
Publication date: 12 November 2019

David Stowell and Alexander Katz

This case considers the buyout of Panera Bread from the perspective of a private equity fund. In early 2017, KLG Managing Director Tom Denning is considering a leveraged buyout of…

Abstract

This case considers the buyout of Panera Bread from the perspective of a private equity fund. In early 2017, KLG Managing Director Tom Denning is considering a leveraged buyout of Panera Bread, a rapidly growing fast-casual restaurant company. A surprising Bloomberg News story signals that the deal process is broadening and KLG will have to act quickly if it hopes to buy Panera Bread. Students assume the role of Tom Denning as he prepares an investment recommendation for KLG's investment committee. In doing so, students are required to consider a very large and expensive investment. Students are challenged to create an investment recommendation by performing due diligence, determining additional questions to ask, and pricing a buyout bid that incorporates an optimal capital structure and meets KLG's return requirements. The Panera Bread case is designed to give students insight into the private equity investment process.

Case study
Publication date: 2 May 2016

Sulagna Mukherjee, M. Durga Prasad and Sudeep S. Kumar

Financial Accounting and Corporate Finance.

Abstract

Subject area

Financial Accounting and Corporate Finance.

Study level/applicability

Undergraduate, Post Graduate and Executive Education.

Case overview

T.A. Pai Management Institute (TAPMI), a leading B School in South India had established its new campus in Badagabettu village, about 5 km away from Manipal, Udupi District, Karnataka. Though the campus housed about a thousand inmates, comprising students, staff and faculty members, a proper public transport system did not develop commensurate with other facilities. The TAPMI administration was flooded with requests from various stakeholders to find a solution to this vexed problem. The Dean Administration had three options before him namely convincing the existing private bus operator to run a new bus en route TAPMI, TAPMI purchases the bus by either paying cash or availing loan from a bank or TAPMI can take a bus on lease. The predicament before Dean was to find out the most economically viable solution.

Expected learning outcomes

At the end of this case discussion, the participants will be able to: understand the application of breakeven analysis; prepare income statement, balance sheet, cash flow statement and forecast of cash flows; evaluate financing and investing decisions by using various techniques; discuss and debate the different alternatives available to the organization.

Supplementary materials

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Subject code

CSS 1: Accounting and Finance.

Details

Emerald Emerging Markets Case Studies, vol. 6 no. 1
Type: Case Study
ISSN: 2045-0621

Keywords

1 – 10 of over 2000