What price should Dow Chemical offer for PBB, a petrochemical compound that is being denationalized by the state of Argentine. To respond to this query, students are compelled to take into account the function of country risk, the business’s primary acquaintance with the currency, and the process of valuing an investment prospect that has multiple phases. With respect to the fact that it is denationalization, students will also be required to take into account the political elements that are present, the motivation of home-managers and the bidding schedule of denationalization. The case offers in-depth information about the cash flows and discount rate – which will enable the students to conduct a comprehensive valuation for developing markets’ venture.
Cash Flows for Stage 1-3, Discounted Cash Flows for Stage 1-3 BEST case and Worst Case, Discount Rate for US and Argentina Markets, Beta, Range of Discount Rates, Terminal Value, Discounted Terminal Value, Present Value of Each Stage.
What do the underlying economics of this business look like?
How would you convince Dow headquarters to invest in this project?
How would you conduct a valuation of this project?
Justify the specific cash flows and the discount rate that you use in your analysis.
What would you bid for this project?