Future State Write-up for AirThreads

Notes on Case Write-ups: Future State

The future case write-up includes an updated version of your current state write-up plus analysis of the future plans.

For the full case write-up, the expected contents should not exceed 1,250 words. It does not need to have significant background information on the case except as it clarifies relevant issues and decisions to be made. Figures can be included in the text or as appendices. The mark will be based on quality of content and usability of the document by an management team.

Specifically, consider organizing your case around the following:

  • Define the current situation, issues, considerations
  • Provide measures of relative importance of issues
  • Analyze potential plans, missing information
    • Analysis will likely include information from projected financial statements in various reasonable scenarios and sensitivities.  Simply presenting financial statements is insufficient analysis: the information must be converted into something clearly connected to the identified important issues.
    • If there is missing information, what questions would you ask of whom and how would they realistically answer those and how could their answers impact your analysis/recommendations
  • Describe a plan for improving the immediate situation and specific issues and putting controls in place to mitigate future similar situations from occurring

A case write-up is expected to:

  • Be the work of the full team and only the team
  • Represent the best thinking and writing of the full team throughout the write-up
  • Be clear regarding issues, their relative importance, decisions considered/suggested around key importance, supporting rationale/analysis, and conclusions
  • Be well organized (use sections in the report, use bullet points, integrate figures)
  • Be well written in terms of sentence structure, grammar, spelling, etc.
  • Be based on the data/evidence in the case (do not include evidence specific to the case from other sources)

The mark for future case write-ups will be based on:

  • Clarity of relevant issues and questions to be asked (20%)
  • Importance/priority of identified issues (20%)
  • Analysis of data/issues (20%)
  • Specific decisions/plan/conclusions supported by analysis (20%)
  • Grammar, style and quality of written document (20%)

 

 

 

 

 

Some data I did for the future state

W.A.C.C. Equity Portion (most recent year 2007): 58% Debt Portion (2007): 42%

Cost of Debt = 5.5%, given in exhibit 6 (assuming interest rate = YTM).
Re=Rf+Beta(market risk premium)

Re=5.5%+0.86(5%) = 9.8%
WACC = WeRe+WdRd

WACC =58% (9.8%) + 42% x 5.5% (1 – .40) = 7%

W.A.C.C = 7%

 

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