To: Dr. Lynna Martinez Subject: Calaveras Vineyards Valuation As per your request‚ my associates and I have calculated a valuation for Calaveras Vineyards using the present value of cash flows. We used the valuation of future cash flows method in order to value to value the company. We have come to the conclusion‚ based on a number of future projections‚ that the best valuation of the vineyards is $4‚356‚000 in assets and $1‚104‚000 in equity. The process at determining this valuation was as
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Calaveras Vineyards Calaveras Vineyard was originally established in 1883 to make wine for the Catholic Church. They occupied 220 acres in California out of which 175 acres was occupied by the vineyard. They had now expanded into production of table wines for retailers and restaurants. It had changed three ownerships in the last nine years. The most recent owner was Stout Plc. which was looking to sell Calaveras and the management of Calaveras was the interested party in this transaction. The
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Goldengate Capital should participate in a $4.5 million management acquisition of Calaveras Vineyards. Located in Alameda Valley‚ California‚ Calaveras Vineyards sits on 220 acres‚ consisting of 175 acres of vineyards‚ and 45 acres of equipment sheds‚ a winery building‚ and a small farmhouse with guestrooms‚ offices‚ and sales room. Strategic Analysis SWOT Analysis Financial Analysis Current management of Calaveras‚ Stout PLC‚ prepared pro forma financial statements for fiscal years ending 1990
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Version 2.1 Calaveras Vineyards In March 1994‚ Anne Clemens‚ a senior vice president at Goldengate Capital‚ received a loan proposal from Tom Howell‚ a managing director with NationsBank=s investment-banking group. The brochure described the prospective management acquisition of Calaveras Vineyards and solicited Goldengate=s participation in the $4.5-million senior financing facility. The facility would consist of a $2-million term loan and a revolving credit of up to $2.5 million. Clemens would
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Calaveras Vineyards1. Executive SummaryAs a smaller producer in the California wine industry‚ Calaveras Vineyards is somewhatcomplicated to compare to other‚ larger‚ producers. In analyzing the company we estimated thevalue of the company to be $9.972 million dollars. Its growth rate of 6.67% is considerablysmaller than that of identified competitors. The liquidation value of the company is estimated at$18.277 million dollars; almost double that of its estimated value. Many of the values of thecompany
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9 Calculating WACC Mullineaux Corporation has a target capital structure of 60 percent common stock‚ 5 percent preferred stock‚ and a 35 percent debt. Its cost of equity is 12.5 percent‚ the cost of preferred stock is 5.5 percent‚ and the cost of debt is 7.2 percent. The relevant tax rate is 35 percent. a. What is Mullineaux’s WACC? b. The company president has approached you about Mullineax’s capital structure. He wants to know why the company doesn’t use more preferred stock financing
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at 4.5% * JP Morgan has issued an estimate for Expected Market Return at 8.5% * Euribor is 2% * Before tax cost of debt = 5% * Tax rate = 30% Please calculate the weighted average cost of capital (WACC) for this firm. 2. You are now asked to calculate the WACC for a toothpaste manufacturer with the following data: * Average share price for last 6 months = €34/ share * Current year’s dividend = €3/ share * Applicable growth rate = 3% * Tax rate =
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2. What is the maximum price they could expect to pay Monmouth‚ based on an analysis of valuation using discounted cash flow‚ calculation of WACC and terminal value determination? 2. Based on the DCF valuation and using a WACC of 8.25% (the beta assumed to be 1‚ the average beta of comparable firms and the coupon rate to be 7.96%‚ the rate for BB rated companies) and a growth rate of 5.5%. The fair price is $40.4 per share for Robertson‚ lower than the $50 offered by Simmons to sell their
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CAPITAL BUDGETING Cost of Capital Evaluating Cash Flows Payback‚ discounted payback NPV IRR‚ MIRR The Cost of Capital • Cost of Capital Components – Debt – Common Equity • WACC Should we focus on historical (embedded) costs or new (marginal) costs? The cost of capital is used primarily to make decisions which involve raising and investing new capital. So‚ we should focus on marginal costs. What types of long-term capital do organizations use? nLong-term debt nEquity Weighted
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as the discount rate in net present value (NPV) project appraisal techniques.1 The weighted-average cost of capital (WACC) represents the overall cost of capital for a company‚ including the costs of equity and cost of debt‚ weighted according to the proportion of each source of finance within the business. In easy words WACC measures a company’s cost to borrow money. The WACC equation is the cost of each capital component multiplied by its proportional weight and then summing: Where: Re
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