Guilmore's Recommendation

Topics: Net present value, Discount rate, Marketing Pages: 3 (709 words) Published: March 18, 2013
Guillermo Furniture Store Recommendation

Resource: The Guillermo Furniture Store Scenario

Write a paper with at least 1,500 words that analyzes Guillermo’s alternatives.


Broker alternative justify your recommendation by discussing the financial and business advantages and disadvantages of your solution versus the alternatives.

For the alternative selected, create a cash flow budget for the next 10 years.

A template with assumptions will be provided by your instructor in the Materials folder; for year one, use the income statement from the week four assignment. Set minimum cash balance and assume you can borrow from a line of credit as needed.

Using an appropriate discount rate and the cash flow budget results, compute the PV of your recommended solution

Explain the discount rate used 

If different from your week 4 WACC result, explain why it is different.


Guillermo Furniture Store Recommendation

Team has chosen to go with the Broker alternative; the Hi-Tech alternative appears to be a good solution but would require an expensive investment to implement the hi-tech manufacturing solution, resulting in layoffs for the company. The Broker alternative coordinates with the existing distributor network. With this option Guillermo may retain some of the high end customer finished products while moving his company from primarily manufacturing to distribution. Team will discuss the financial business advantages and disadvantages of the Hi-Tech alternative versus the Broker alternative provide a cash flow budget for the Broker alternative for 10 years, set minimum cash balance, and determine a line of credit amount. Determining the discount rate for the Broker alternative will follow the below list of considerations:

The WACC rate calculation in Week four for the Broker alternative is 10.4% a company should accept and undertake a project that has a positive Net present...
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