Question: I need help with this problem. Project Option #2: Buy PolarBear Seltzer, Co. Expansion Project Title Project Description and Details Project Cost (Initial Investment) First
I need help with this problem.
| Project Option #2: Buy PolarBear Seltzer, Co. | ||||||||
| Expansion Project Title | Project Description and Details | Project Cost (Initial Investment) | First Year Cash Flow | Annual Growth Rate (5 years) | Expenses as a percentage of Revenues | Payback Period | NPV | IRR |
| Purchase of PolarBear Seltzer Company | This company is based in Massachusetts and distributes their flavored seltzers nationally. While they have a large, loyal customer following, the company has exchanged hands multiple times. The current owners want out of the business, but it is uncertain as to why this is the case. The company is undervalued and the sale price reflects this. | $15,000,000 | $8,500,250 | 3.25% | 54% | |||
| Calculation of Minimum Payback Period: | Years | |||||||
| NPV of Projected Cash Flows | ||||||||
| Year 0 Cash Flow | Year 1 Cash Flow | Year 2 Cash Flow | Year 3 Cash Flow | Year 4 Cash Flow | Year 5 Cash Flow | |||
| Projected Revenues at annual growth rate | ||||||||
| Projected Expenses at 54% of Revenue | ||||||||
| Annual Cash Flows | ||||||||
| Discount rate for each year (6%) | ||||||||
| Present value of cash flows | ||||||||
| NPV of Projected Cash Flows | ||||||||
| Internal Rate of Return (IRR): |
Step by Step Solution
There are 3 Steps involved in it
It seems like the question is related to analyzing the investment in a project specifically the purchase of PolarBear Seltzer Company The problem involves calculating the Payback Period Net Present Va... View full answer
Get step-by-step solutions from verified subject matter experts
