Conduct a multiples analysis to value Sun Essay Sample
What economic basicss are reflected in the multiples? When carry oning DCF with sempiternity the hazard free rate is used as the growing rate to cipher Television of Sun microsystems. When carry oning DCF with multiples we use the median of the debt to equity ratio of comparable companies to come up with the EBIT issue multiple to cipher the Television of Sun Microsystems. Based on the information above one might believe that utilizing the multiples attack may be the right manner to value Sun Microsystems. However utilizing multiples in this state of affairs may be inaccurate to cipher Television for Sun Microsystems. because the companies being used to compare to Sun Microsystems are in a batch better off financially than Sun Microsystems such as Intel ; therefore overestimating Sun Microsystems.
If a viing bidder appears. how high a monetary value should Oracle be willing to offer? Based on the computations made by calculating the value of Sun Microsystems station soaking up by prophet it was noticed that the monetary value offered by Oracle to Sun Microsystems left a batch of room for dialogues presuming extra bidders appear. For both the DCF with Perpetuity Television and Multiples TV predict/portray a value exceling the $ 9. 50 offer. However the inquiry on how high should Oracle be willing to offer will depend on Oracles management’s desire of return is. Theoretically the monetary value offered by Oracle should stay from $ 9. 50 PS to $ 14. 45 PS. See Excel Spread Sheet attached for computations.