Chapter 7 terence breezeway prairie home mini case

Read the mini case at the end of Chapter 7. Wri August 8, Uncategorized Instructions: Write a business letter to Mr. Firewater who has asked you two questions.

Chapter 7 terence breezeway prairie home mini case

Now it was time to spend more time riding and fishing on the old Lazy Beta Ranch. Breezeway was proud of this record, although he wished that Prairie Home could have grown more rapidly. He had passed up several opportunities to build new stores in adjacent counties. Prairie Home was still just a family company.

Its common stock was distributed among 15 grandchildren and nephews of Jacob Breezeway, most of whom had come to depend on generous regu- lar dividends. The commitment to high dividend payout" had reduced the earnings available for reinvestment and thereby con- strained growth.

Breezeway believed the time had come to take Prairie Home public.

Chapter 7 terence breezeway prairie home mini case

Once its shares were traded in the public market, the Breezeway descendants who needed or just wanted more cash to spend could sell off part of their holdings.

Others with more inter- est in the business could hold on to their shares and be rewarded by higher future earnings and stock prices. But if Prairie Home did go public, what should its shares sell for? Breezeway worried that shares would be sold, either by Breezeway family members or by the company itself, at too Iowa price.

Breezeway had intervened and convinced the would-be seller to wait. One finan- cial projection shown in the top panel of Table 7. After that the company could resume its normal dividend pay- out and growth rate. Breezeway believed this plan was feasible. He was determined to step aside for the next generation of top management.

But before retiring, he had to decide whether to rec- ommend that Prairie Home Stores "go public"-and before that decision he had to know what the company was worth.

The next morning he rode thoughtfully to work. Firewater to prepare a formal report to Prairie Home stockholders, valuing the company on the assumption that its shares were pub- licly traded. Firewater asked two questions immediately. First, what should she assume about investment and growth?

Breezeway suggested two valuations, one assuming more rapid expansion as in the top panel of Table 7. Second, what rate of return should she use?

Prairie Home Stores hascommon shares. This profitability rate is constant. The top panel assumes all earnings are reinvested from to In and later years, two-thirds of earnings are paid out as dividends and one-third reinvested.

The bottom panel assumes two-thirds of earnings are paid out as dividends in all years. Columns may not add up because of rounding. Browse hundreds of Finance tutors.View Stocks MINI CASE from FINANCE at IoBM. Case Study Valuing Stocks Terence Breezeway, the CEO of Prairie Home Stores, wondered what retirement .

Chapter 7 Minicase. hapter 7 Minicase. Terence Breezeway, the CEO of Prairie Home Stores, wondered. what retirement would be like. It was almost 20 years to the day. since his uncle Jacob Breezeway, Prairie Home’s founder, had.

asked him to take responsibility for . Mini Case: Prairie Home Stores Valuing Stock Terence Breezeway, the CEO of Prairie Home Stores, wondered what retirement would be like. It was almost 20 years to the day since his uncle Jacob Breezeway, Prairie Home’s founder, had asked to take responsibility for managing the company.

Minicase: Terence Breezeway, the CEO of Prairie Home Stores has grown his business steadily and was solidly profitable. Most of the supermarkets had been modernized and its brand name was well known. The common stock was distributed among 15 grand children and nephews of Jacob Breezeway.

Chapter 7 terence breezeway prairie home mini case

Terence Breezeway, the CEO of Prairie Home Stores, wondered what retirement would be like. It was almost 20 years to the day since his uncle Jacob Breezeway, Prairie Home’s founder, had asked him to take responsibility for managing the company.

Chapter 7 Minicase Terence Breezeway, the CEO of Prairie Home Stores, wondered what retirement would be like. It was almost 20 years to the day.

(Solved) - Chapter 7 Minicase Terence Breezeway, the CEO of Prairie Home | Transtutors