FINC 495 Contempary Issues in Finance

Create a proformaIncome Statement for the brewpub project by creating a proforma income statement. Use the “best case and “worse” case scenarios.” To do this, you will need to calculate the annual revenues and annual expenses for the 10-year project, any changes in net working capital, and any changes to capital expenditures. Describe all assumptions and calculations you used to arrive at the final free cash flows. Calculate the NPV and IRR of the project given the information presented using the “best case and worse case scenarios.” Should Samantha and Grant go ahead with the brewpub investment? Why or why not?   Suppose they are operating under the best case scenario and they decide that in year 5 they would like to do major renovations to the restaurant (a capital expense). They figure this will cost an additional $1,000,000 in year 5. Along with the renovations, they figure they could increase the price of the beer to $7 per pint and keep it at that price for the duration of the project. How do these changes impact NPV and IRR? Is it worth it for the pair to go forward with the renovations? Describe how you found this result (also show in the spreadsheet).