Question
Rhiannon has been offered the chance to buy a 50% share in the stone preparing business she buys from for $300,000. Rhiannon has inquired about
Rhiannon has been offered the chance to buy a 50% share in the stone preparing business she buys from for $300,000. Rhiannon has inquired about borrowing the sum from the bank and has been quoted a 6% annual rate. She expects the business to maintain its $100,000 annual profit level for the next ten years. Rhiannon also wants to repay the loan within ten years, so she feels like this is an appropriate investment evaluation horizon. She is wondering what some appropriate methods of evaluating this investment opportunity might be. In addition to learning about how you would evaluate the investment and why, she wants to know about other relevant factors which should be considered.
Analyze Rhiannon's business and advise her on the matters raised in the case. Make sure your recommendations are well supported by quantitative and qualitative analysis which ties to the case facts.
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