Use Sun Microsystems case
• Perform a stand-alone valuation (i.e. no synergies) and a valuation for Acquisition (i.e. using the synergies and associated costs). The Synergistic valuation will be the valuation that you use for the recommendation.
• Use a tax rate of 35%
• Use an MRP of 6.0%
• Constant growth/steady-state is not obvious within the case. Come up with a justifiable long-term growth number. GDP growth forecasts would be a “ceiling” on growth. The 10-year treasury is sometimes used, inflation forecasts (2% to 2.5%), or a rate between inflation up to 5% could be used as well. Just be able to justify your position.
• Make sure to give only one opinion, but feel free to discuss alternative valuations that were considered but not recommended.
