Ford Motor Company`s Value Enhancement Plan (A)

Ford Motor Company`s Value Enhancement Plan (A)

Individual assignment 3000 word limit

Case Study Assignment

Your assignment is drawn from the Case Study:

Ford Motor Company`s Value Enhancement Plan (A)

You are required to read carefully the case study and hand in your answer to the following questions:

1. Should Ford:
   1. go ahead with the complicated VEP, or
   2. issue a cash dividend, or
   3. conduct a share repurchase?

Please justify your response.

1. If the VEP plan is implemented, what would be your choice (cash or shares or a combination) if you were one of the following, and why:

1. a Ford family member holding Class B shares
2. an institutional investor, such as TIAA-Cref or the Calpers;
3. a regular outsider shareholder.

1. Using the beta information in Exhibit 10, and using the balance sheet information in Exhibits 6 to 9, calculate the WACC in 1999 for Ford, DaimlerChrysler and General Motors. Justify your calculations.

Please complete the arguments for your answers using all relevant insights, including from the lectures, from the course textbook, and from any literature those sources cite.

Essay assessment

You will be assessed on the rigour of your analysis and evidence of critical understanding of the issues we have been discussing in class and ability to apply these to the real world situation (60%), quality of your written work (treat this as a management report) (10%) and the quality of your research as measured by the use of original sources and breadth of further reading (30%).