zoom in! Please Do not copy any previous information, I need as much information as possible to write three pages.

Estimate a valuation for the company. Explain an estimated profit as well as r value. These numbers can be made up, just back them up by reasoning. Explain the parameters of the company, for the demand and cost function. Explain the risks the company can take, what kind of market they are in etc. What kind of industry structure does The company compete in? Entry barriers ?

In your project, you will propose a valuation of Honest Tea, at the time that it entered negotiations to be acquired by Coca Cola. A simple formula for valuing a company is pi/r, where pi is the expected annual profit in a typical year, and r is a typical rate of return oil an asset that involves risks similar to investing in the company. (If you're curious, you can find some details on where this formula comes from below, in section A1.) You can make a reasonable guess about r (kudos if you justify it by looking at actual interest rate or stock market return data, but a guess is fine). So your main task will be to come up with an estimate of pi. The first order of business is therefore to specify a demand function and a cost function (with real numbers, not letters). Explain in your report (1) the Interpretation of the main parameters (for example, how the coefficient on price in the demand function relates to price elasticity) and (ii) how you can justify the values you chose for the parameters (if possible, based on information you have about Honest Tea). Do this for both the demand and the cost function. Be explicit on what you're assuming about the industry structure that Honest Tea competes in (monopoly? competitive? monopolistic? oligopolistic?), and the technology of producing tea (economies of scale?). The characteristics of iced tea as a product (income effects? are there important complements or substitutes? does advertising matter?). Be sure that your functions are actually consistent with this discussion. Finally, estimate maximum profit pi in a spreadsheet, and the implied value of the company, pi/r. Call this your baseline estimate. Next, perform a sensitivity analysis, by looking at a risk (of lower profitability) and a potential opportunity (for higher profitability). In the risk scenario, consider one or more parameter changes that would be harmful to Honest Tea (such as a long term income reduction, competitor price cut, new taste trends, higher resource costs, etc.), and explain why you believe it's a plausible threat Honest Tea must be concerned about. Recalculate profit and the company value as a worst-case estimate. Finally, highlight an opportunity for Honest Tea. Some possibilities are an investment in a cost-reducing technology or an increase in quality, an advertising campaign, an additional product line, a new incentive scheme that increases executive performance, or a strategic move that creates an entry barriers and thereby modifies the industry structure. You might want to demonstrate on another Excel worksheet how this project works, and how it influences a parameter in your demand or cost function. Recalculate profit and the company value as a best-case estimate