Stockbridge Sprockets, Inc. (hereinafter referred to as the “company”), has had a surge in orders that they believe will continue into the foreseeable future, and if so will likely necessitate building or buying a new factory to keep up with product orders. They have decided to do an analysis on potentially building a factory on a tract of land they currently own near Mason. They have hired you to complete this analysis and make a recommendation.
To perform the necessary analysis, you have compiled the following data:
Part 1 – Base Case:
Using the above data, complete the DCF Model in Excel posted on Connect. Compute the Base Case’s NPV and IRR. Then copy the Base Case worksheet and post to the tabs marked Part 2, Part 3, and Part 4. A consulting firm as suggested a few alternate scenarios based on their analysis, and has computed their estimate of the likelihood of each scenario occurring. They have also estimated that the Base Case has a 50% chance of occurring.
Note: PLEASE show the formulas and functions used for all of the answers in the Excel spreadsheet. Complete Base Case only.
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