Introduction and Background:
Comerica Incorporated formally known as CMA is a financial service company based in Dallas, Texas. The company has opened its doors for business under the name of Detroit Savings Fund Institute. Before the economic crisis of 2008, the company was performing really well as the 2007 financial statements showed assets of $62.3 billion, total loans of around $50.7 billion and total deposits of around $44.3 billion. The basic functions of the company involve giving savings and loans to the businesses that run in USA.
Its primary business involves depositing and accepting loans from different businesses and individuals. The basic and the most important source for company’s income is to earn on net interest income. Other sources for the company’s income include lines: of credit, capital market products, cash management and loan syndication services.
Problem Statement:
The economic crisis of 2008 severely affected the economy. In that scenario, a manager of the student Capital Management Fund found an opportunity to increase its portfolio by adding Comerica Incorporated Bank into it. Before making any decision, the manager of the company wanted to value the firm’s debt and equity to analyze the growth and profit potential. In order to do that, the manager needs to carryout valuation of the bank so that the he will be able to identify whether the value of the company is undervalued as compared to the market value of the bank or it will be further overvalued. For finding the value of the bank other external factors need to be analyze.......................................
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