Centennial Pharmaceutical Corporation

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Case

Reference no. UVA-F-1446

Subject category: Finance, Accounting and Control

Authors: Kenneth M Eades (Darden School of Business, University of Virginia)

Published by: Darden Business Publishing

Originally published in: 2004

Version: 6 June 2016

Revision date: 13-Sep-2016

Length: 7 pages

Data source: Published sources

Topics: Discounted cash flow; Risk rating; Valuation; Earn-out plan; Finance; Corporate finance

Share a link: https://casecent.re/p/1530

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Abstract

This case presents a challenging discounted-cash-flow (DCF) problem associated with the valuation consequences of changes made to an earnout agreement. The task of the student is to conduct a DCF analysis to compare the values of the original earnout and the amended earnout. The case is designed to be taught in an introductory course as an application of DCF principles, in particular, the choice of an appropriate discount rate consistent with risk.

Industries:

Pharmaceuticals; Bio-technology; Health care