Assignment Task:
Assessment Task: Case Study
This task is based on the Capstone Case 1: Eco-Products, Inc. (refer Leach, JC, and Melicger, RW 2018, Entrepreneurial Finance, 6th edn, Cengage Learning, Boston, MA. pp. 617-647). You need to carefully read the material presented in this case.
Your task is as follows:
You are to prepare a report to the Board of Eco-Products, Inc. that provides a detailed analysis of:
The business; Its funding requirements; The various funding options that have been considered; and A discussion and analysis of the funding option selected.
You should use the various requirements that are set out on pages 633 and 634 as a guide to your discussion/analysis, but remember you are writing a report so do not just provide an A. to K. submission. You do not need to address part H.1. as this was not covered in the lectures or tutorials. You also do not need to provide the ratio analysis required by part D unless you believe this enhances your discussion.
Part K.3 asks you to prepare a valuation of Eco-Products using a relative valuation method (covered in chapter 15 of the text). In addition to using the relative valuation method use a percentage of sales method to prepare projected income statements, balance sheets, and cash flow statements for each of the years 2008, 2009, 2010, 2011, 2012, and 2013 based on the information contained in the attached spreadsheet. 2013 is the Terminal Year. Prepare a discounted cash flow valuation of the business as at December 31st, 2007 using the methodology set out in chapter 10 and 11 of the text – hint the available cash flows for 2008, 2009,2010, and 2011 are zero. You do not know what the cost of equity is, but you do know that what the pre-money valuation is (refer to the Greenmont Capital Partners’ Term Sheet). Hint: use the goal-seek function to determine the cost of equity required to achieve the pre- money valuation. Do you consider the cost of equity that you calculated is appropriate for this type of investment?
Would you recommend that the Board accept the terms being offered by Greenmont Capital Partners?
I have attached a marking rubric to provide guidance in preparing your report.
Include in your report a reflective assessment of what you have learned from preparing the report. This reflection should cover the process of analysing the Eco-Products business as well as what insights you have gained that will help you with your own entrepreneurial plans or career in the finance industry. It is likely that you will make use of the internet to complete this task as there will have been much written about the rise and fall of this business. You should make sure that you don’t fixate on a single source – as then you will be only reflecting the views of the author of that source. You also should make sure that you are completely aware of the University’s position of plagiarism – this needs to be your own work and not that of someone else. Also ensure that where you do use ideas gained from another source that you adhere to the standards of academic referencing.
In submitting your assignment, you should submit the following files via MyLO:
1. An approved cover sheet;
2. Your report in Word format – please do not submit a PDF file – please ensure that your name is included in a header section on each page of your report;
3. Any Excel spreadsheets you used to produce forecasts etc.
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