Case Study Questions Valuation Mercury Athletic Footwear This case uses the potential sale of Mercury Athletic

Footwear, a mid-sized athletic and casual shoe company, for students to apply basic discounted cash flow (DCF) valuation using the weighted average cost of capital as its valuation discount rate. The Mercury case requires students to formulate projections of debt-free cash flows using pro forma financial statements, to estimate a terminal value and cost of capital for the enterprise, and to consider whether and how to incorporate the effects of synergies. The primary goal is to generate DCF values for the enterprise without synergies. 1. Is Mercury an appropriate target for AGI? 2. Review the projections formulated by Liedtke. Are they appropriate? How would you recommend modifying them? 3. Estimate the value of Mercury using a discounted cash flow approach and Liedtkes base case projections. Be prepared to defend additional assumptions you make? 4. Do you regard the value you obtained as conservative or aggressive? Why? 5. How would you analyze the possible synergies or other sources of value not reflected in Liedtkes base case assumptions?