Objectives:

1. Perform a qualitative analysis on a capital budgeting project. 2. Perform a valuation analysis on an existing business. 3. Perform scenario analysis (that makes business sense!)

Tasks:

1. Discuss the risks and rewards of investing in Chang Dental from Chris Millers perspective using a SWOT analysis. 2. Discuss the base case valuation provided to you. 3. Run scenario analyses on key variables using information from the case. 4. Make your final recommendation on whether or not Chris Miller should buy Chang Dental.

Tips:

Task 1: Use the information given in the case, but dont be afraid to include your own experiences with dentists in your analysis.

Task 2: Use the Excel file posted. In sheets "Exh1" and "Exh2" are the financial statement data. In sheet "Base_Case" is the completed base case valuation forecast. M7_Project_1_Class.xlsxDownload M7_Project_1_Class.xlsx

Task 3: Use the case as a guide for scenarios. Do not just randomly make scenarios.

1 Chang Dental Clinic Valuation Dollar amounts in $1,000s \begin{tabular}{|r|r|r|r|r|r|r|r|r|r|r|r|r|} \hline 2005 & 2006 & 2007 & 2008 & 2009 & 2010 & 2011 & 2012 & 2013 & 2014 & 2015 \\ \hline & 0 & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 \\ \hline \end{tabular} S(1t) F(1t) Dt C [replacement] C [expansion] Net result oper CF PVs Value Debt Equity Base_Case: Buyer's Assumptions; tradtional analysis [1] use 10 years on basis of loan life and equipment life [2] half of previous year's growth rate until normalization [3] historical cost of Associates Service of Financing Exh1 Exh2 Base_Case + Ready ix Accessibility: Investigate 1 Chang Dental Clinic Valuation Dollar amounts in $1,000s \begin{tabular}{|r|r|r|r|r|r|r|r|r|r|r|r|r|} \hline 2005 & 2006 & 2007 & 2008 & 2009 & 2010 & 2011 & 2012 & 2013 & 2014 & 2015 \\ \hline & 0 & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 \\ \hline \end{tabular} S(1t) F(1t) Dt C [replacement] C [expansion] Net result oper CF PVs Value Debt Equity Base_Case: Buyer's Assumptions; tradtional analysis [1] use 10 years on basis of loan life and equipment life [2] half of previous year's growth rate until normalization [3] historical cost of Associates Service of Financing Exh1 Exh2 Base_Case + Ready ix Accessibility: Investigate