Fin 571 Week 4

Topics: Investment, Net present value, Finance Pages: 3 (823 words) Published: July 29, 2011
Guillermo Furniture Analysis Paper
University of Phoenix
Corporate Finance

Guillermo Furniture Analysis Paper
. Guillermo Navallez is the owner and operator of the Guillermo Furniture Company. Mr. Navallez has operated this store for year in the Sonora, Mexico area and had built a positive rapport with that community. Recently, Mr. Navallez has two issues he is facing. One issue is an overseas competitor and the other is the high cost of labor. The overseas competitor is making furniture using new and innovative technologies. Because Guillermo furniture specializes in one-of-a-kind hand crafted furniture, his cost of labor is extremely high because of the time that is needed to create each piece. Because of this, Guillermo is losing profit as well as customers; Mr. Navallez has been trying different ideas to help improve his business. . At this point in time, the only option for the Guillermo furniture store is simple. This company must join the ranks of its competitors in order to stay in business. Guillermo needs to transition from handcrafted pieces into using the high tech technology like its competitors. This technology will cut costs on materials as well as labor, and still supply quality furniture. Guillermo Furniture has an option to be taken over by its competitor. This option is not received well by Mr. Navallez. He has no intention of being bought out. Because he does not want to lose everything that he has worked for, Mr. Navallez has to put a plan into action immediately. He is concerned about his family and his responsibility to take care of them. In The company used the “what-if” example, it would allow the business owner to take a combination of his projections and come up with one resolution. If he includes numerous investments it will help to prepare a present value index. Mr. Navallez could then capitalize on his investments. The WACC is established by the use of multiple assessments Mr. Navallez has been...
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