I need to present this to the class so throughly explain. Hammer home the issue we are addressing early and often.
Talk about the main issue of the case.
what they think the issue is and then touch on Meyer and Suchecki. Also ask how they think Rollo Von Muur is affecting decision making and speed of action with his stock buy of 10%.
what they know about hurdle rate and how it comes into decision making within the firm.
splitting the divisions to have multiple hurdle rates due to different industry risk levels (refer to excel to show that) or if the entire business should have the same hurdle rate.
Explain splitting into two hurdle rates would make sense due to the nature of the two divisions being so inherently different.
Move into talking about how the weights would change in the WACC if we invested the $1
Billion into either division, food or instrument.
Ask Everyone which division they believe the money should be invested into and why.
Transition that into talking about EVA
Show the calculations for EVA for investing the money into each division in order to make a decision.
Ask the class which investment makes more sense and who they believe is correct.
answer these questions as if they were asking me these companies
