ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫׊‬
ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫͑͑͑ͪͩͧ͑͢׊‬
ͧͩͪ͑͑͑͢
͵ΖΔΖΞΓΖΣ͑
͵ΖΔΖΞΓΖΣ͑ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡
ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ
͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ

Investing in a Brewpub: A Capital Budgeting Analysis

ƒ‰‡

ͳ

Elizabeth Webb Cooper, Ph.D.
Associate Professor of Finance
La Salle University
1900 W. Olney Ave.
Philadelphia, PA 19041 cooper@lasalle.edu Elizabeth Webb Cooper, La Salle University, cooper@lasalle.edu
Case ID 041001

ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫׊‬
ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫͑͑͑ͪͩͧ͑͢׊‬
ͧͩͪ͑͑͑͢
͵ΖΔΖΞΓΖΣ͑
͵ΖΔΖΞΓΖΣ͑ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡
ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ
͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ
Abstract
Two recent college graduates own a restaurant and want to decide whether to invest in a brewpub system, which would allow the pair to sell beer on tap to their customers. The business owners must complete a thorough cash flow analysis of their planned investment using the concepts of operating cash flows, working capital investment and capital expenditures. They need to have a keen understanding of relevant versus non-relevant cash flows. Further, they must use these cash flows in order to come up with the net present value (NPV) and internal rate of return (IRR) of the investment under different realistic business scenarios. The pair also must use sensitivity analysis to see how their investment decision may or may not change as a result of varying costs of capital. In the end, the pair needs to decide whether to invest in the brewpub in light of their full analysis.
The Case
Samantha Myers and Grant Patrick graduated from college seven years ago.



References: Hawawini, Gabriel and Claude Viallet (2007). Finance for Executives. (4th ed.). South-Western Cengage Learning. Kierulff, Herbert (2012). IRR: A Blind Guide. American Journal of Business Education, 5(4), 417-426. Ross, Stephen; Randolph Westerfield and Jeffrey Jaffe (2009). Corporate Finance. (9th ed.). Ryan, Patricia and Glenn Ryan (2002). Investment Practices of the Fortune 1000: How have things changed? Journal of Business and Management, 8(4), 355-364.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Project 1

    • 300 Words
    • 2 Pages

    Bryan Kelly 02/09/2014 NW 306 Project 1 Deliverables: Two Diagrams, One Summary Bryan Kelly 02/09/2014 NW 306 “Intro to Network Security” Project 1: Network Diagram with Security Features Defense in Depth and Web Security Summary Report The purpose of this summary is to explain the changes made in the to-be diagram from the previous as-is diagram. Also, to note the protective hardware added, and the justification for the changes made.…

    • 300 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Project 1

    • 694 Words
    • 3 Pages

    Project 1: 1. Results for a: ht=500/ spd=0mph —too slow! Satellite crashed into Earth! Results for b: ht=500/ spd=100mph —too slow! Satellite crashed into Earth! Results for c: ht=500/ spd=25000mph —too fast! Satellite left viewing area and took off in space somewhere! I was determined to get a 100%, so I played around with the numbers until I found that at 500 miles above the Earth, the satellite would have to be launched at 16,700mph in order to reach a perfect orbit. Below is the explanation…

    • 694 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Project 1

    • 817 Words
    • 2 Pages

    Project #1 Part 1. After reading the California Infant/Toddler and Development Foundations book I found the information very helpful and surprising. Knowing that in California the infant and toddler development is aligned with the preschool learning foundations is something I was not aware of. Having infant/toddler programs focus on social emotional development along with the other areas of focus is very important at such a young age. The main areas all the programs focus on are very critical areas…

    • 817 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Project 1

    • 373 Words
    • 1 Page

    Project 1 Write a personal reflection that explains how you would go about managing your work priorities and professional development. In the personal reflection you should ask and answer these questions: 1. What makes a good role model and how would I ensure that I acted as a role model for employees I supervise? 2. What are the traits of an effective leader? Do I have these traits? How would I develop these traits? 3. How would I ensure that my work goals and plan reflect the organisation’s goals…

    • 373 Words
    • 1 Page
    Satisfactory Essays
  • Good Essays

    Project #1

    • 1243 Words
    • 5 Pages

    Project #1 Analysis of Literary Criticism The work that I chose was an excerpt from Dr. Maya Angelou book, “Wouldn’t Take Nothing For My Journey Now” and other works from the author Maya Angelou simply because in almost all of her works whether poems, books and etcetera, she writes the same way.. In her except she talks about being a young mother of a Kindergartener. She talks also of how she worked hard to make a living for her and her child by working two jobs. The talk of how she survived and…

    • 1243 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    Is305 Project 1

    • 2310 Words
    • 10 Pages

    PROJECT Project Project: Risk Management Plan Purpose This project provides an opportunity to apply the competencies gained in the units of this course to develop a risk management plan for a specific business problem related to an organization's identification of an outdated plan. Required Source Information and Tools The following tools and resources that will be needed to complete this project: Course textbook Internet access for…

    • 2310 Words
    • 10 Pages
    Satisfactory Essays
  • Powerful Essays

    Research project 1

    • 692 Words
    • 4 Pages

    Research Log Project Part 1 for Note: This project received faculty feedback on 24-May-14 10:20 PM EST. Instructions: Work through each step of this log, answering each question as the directions indicate. Each step, except Step 1, will receive a grade, and the sum of these grades will constitute your total grade for Research Log Part 1. Refer to the section on how each step of the log will be graded for detailed grading information. Step 1: Select Your Research Question Top of Form 2. What…

    • 692 Words
    • 4 Pages
    Powerful Essays
  • Better Essays

    Course Project 1

    • 1403 Words
    • 6 Pages

    Course Project – Part I You must show all work and calculations by typing out the longhand formula, or post a screen shot of any online calculator used, or attach an excel file showing formulas/calculations in order to earn any credit Introduction The Course Project is an opportunity for you to apply concepts learned to a real-life simulation experience. Throughout the Course Project, you will assume that you work as a financial analyst for AirJet Best Parts, Inc. The Course Project is provided…

    • 1403 Words
    • 6 Pages
    Better Essays
  • Good Essays

    Matlab Project、1

    • 820 Words
    • 4 Pages

    Matlab Project 1 Yiming Zhang (C1) Folder name:Yiming_Zhang ------------------------------------------------- PART A: Write a function subEncrypt such that will encode a message using the simple substitution algorithm discussed in the introduction. function encrypt=subEncrypt( plaintxt,key ) %this function help to encode a message using the simple substitution algorithm %Your plaintxt should be entered in all capitals numkey=(65:90); %stand for Letters A~Z encrypt=zeros(1,length(plaintxt));…

    • 820 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Project Deliverable 1

    • 966 Words
    • 6 Pages

    Project Deliverable 1: Project Plan Inception By: Justin M. Blazejewski CIS 499 Professor Dr. Janet Durgin 21 October 2012 Background In an uber globalized market of today, companies are faced with challenges in each and every step of their business. Our analytics and research services are geared towards giving those companies that extra edge over the competition. We process and analyze terabytes of data and break down all the fuzz and chatter around it to give our customers…

    • 966 Words
    • 6 Pages
    Good Essays