This about a financial case. I have the answers, however, I need them paraphrased and to make it different from the original. (Just write the same answers in a different way with different use of word). Here are the questions:
1. Why does Warren Buffett want to buy MEGs newspaper division?
2. Is MEGs newspaper division worth $142 million?
a. Start by valuing the newspaper division, assuming the cash flow forecast in Exhibit 10 is reasonable. For the purposes of this analysis, assume a market risk premium o f6%, a debt beta of 0.20, a closing date for the transaction of January 1, 2012 (you can ignore half-year discounting), and a reduction of $30 million in your valuation of the entire newspaper division to reflect the fact that the The Tampa Tribune is excluded from the purchase agreement.
b. Are the cash flow forecasts reasonable? What are the critical assumptions you need to make for the newspaper division (again, lessThe Tampa Tribune) to be worth $142 million? To be worth more than $142 million?
3. How much value, if any, does Buffett derive from the credit agreement?
4. What should MEGs CEO Marshall Morton do? What are his options?