To estimatethe reinvestmentrate in theterminalyear, we
assumedthatGlobalCrossingwouldearnitscostofcapitalof
7.36% in perpetuity after year 10, and that the expected
growthratewouldbe5%.Thisyieldsareinvestmentrateof
67.93%.
Discountingtheoperatingcashflowsandtheterminalvalue
backtothepresent,wearrivedatanestimateofthevalueof
the operating assets of $5,530 million. Note, though, that
almost all of this value came from our presumption that
Global Crossing would not only survive but become
profitable,which isthesource of thelargeterminal value.
Addingbackthecashandmarketablesecuritiesheldbythe
firm ($2,260 million) and subtracting the value of debt
($4,923 million) and the estimated value of management
options outstanding ($14.31 million),
20 wearriveatavalueofequityof$2,852million.Dividing
bythenumberofshares outstandingresults ina valueper
share of $3.22.