Use the Adjusted Present Value (APV) approach to value WHP.

Use a discount rate of 20% as the base case.

Assume a tax rate of 40%.

Assume that debt is paid down as scheduled through the end of 1993. Then assume that the debt is rolled over thereafter. That is, debt is constant after 1993.

Assume all debt payments occur at year end.

Assume that the $21.0 million revolving loan is never paid off. That is, the revolving loan is renewed every year after the 6^th year.

To simplify the analysis, assume costs and expenses are projected to be the same percent of sales in the future as they were during the period 1980-1983. Use an average percentage rate in making this calculation.

Project year-by-year cash flows for 1984-1992, then assume a constant growth rate of cash flows thereafter.

This is from The Management Buyout of Whit Hen Pantry, Inc. Case study