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Loan Officer Steve Becker owns Blue Ridge Brewery, a microbrewery in Arden, North Carolina. He charges dis- *ributors $100 per case for his premium beer.
Loan Officer Steve Becker owns Blue Ridge Brewery, a microbrewery in Arden, North Carolina. He charges dis- *ributors $100 per case for his premium beer. The distributors tack on 25% when selling to ers who in turn add a 30% markup before selling the beer to consumers. In the most recent year, Blue Ridge's revenue was $8 million and its net operating income was $700,000. Becker reports that the costs of making one case of his premium beer are $32 for raw ingredients, $20 for labor, $4 for bottling and packaging, and $12 for utilities. Assume that Becker has approached your bank for a loan. As the loan officer, you should consider a variety of factors, including the company's margin of safety. Assuming that other information about the company is favorable, would you consider Blue Ridge's margin of safety to be comfortable enough to extend a loan
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