perform a simple analysis of Berkshire’s return on investment in

MidAmerican. Beginning in 2000, Berkshire Hathaway made an

outlay of $1.642 billion for an eventual 80.5% economic interest in
MidAmerican. Berkshire’s economic interest in MidAmerican was
composed of both equity and debt investments such that the cash
flows to Berkshire included interest payments, common dividends,
and preferred dividends. Therefore, MidAmerican’s free cash flows,
the cash flows available to all debt and equity claims. With regards to
the investment in MidAmerican Energy Holdings, they experienced a
loss of revenue in 2004 as it fell to 170 million while the prior year
they had revenue of 416 million. Therefore it can be expected that the
acquisition of PacifiCorp will increase the revenue in the next year.

Berkshire’s invested $3.83 billion in the “Big Four” companies in

multiple transactions between May 1988 and October 2003. The big
four companies consist of American express, Coca-Cola, Gillette, and
Wells Fargo. In Exhibit 3 we see that in 2005 American Express had
an annual average total return of 17% and a market value of $8.546
billion. Berkshire Hathaway owned 12.1% of the company and the
cost of investment was 1.470B. Berkshire owned 8.3% of shares to
the coca cola company. Coca cola’s market was 8.328 billion and had
an average rate of return of 16%. Berkshire paid 1.299 billion
investment. Berkshire owned 9.7% of Gillette Company. Gillette’s
market share was 4,299 billion and the average rate of return 9.7% of
Gillette Company. Gillette’s market share was 4.299 billion and the
average rate of return was 14% Berkshire invested 600 million in the
company. The final company is Wells Fargo. Berkshire owns 3.3% of
the company. Wells Fargo market value is 3.508 billion and had an
average rate of return of 1.3%. Berkshire invested 369 million. Since
Berkshire has invested 3.84 billion in the four companies, the
combined share values for the four companies is $24,681 billion. That
is a significant in their investments and all four companies are holding
a steady market share and average rate of return. I would say
Berkshire made a solid investment that is providing good on their
investment.