Calavera Case

Contents

| Page |

Question OneQuestion TwoCalaveras Vineyards ReportContents 1. Executive Summary 2. Background 3. Qualitative Analysis 4. Quantitative Analysis 5. Appendices 6. Conclusions and Recommendations | 3345679131720 |

Question One

1.1 | E |

1.2 | C |

1.3 | D |

1.4 | D |

1.5 | E |

1.6 | B |

1.7 | B |

1.8 | B |

1.9 | D |

1.10 | A |

1.11 | D |

1.12 | C |

1.13 | C |

1.14 | E |

1.15 | D |

1.16 | C |

1.17 | A |

1.18 | A |

1.19 | B |

1.20 | C |

Question Two

Calaveras Vineyards Report (below)

Calaveras Vineyards Report |

Contents

| Page |

1. 1. Executive Summary 2. 2. Background 3. 3. Qualitative Analysis 4. 4. Quantitative Analysis 5. 5. Appendices 6. 6. Conclusions and Recommendations | 679131720 |

1 Executive Summary

This report investigates whether NationsBank should approve the loan application of $4.5 million to purchase Calaveras Vineyards. The method of investigation entailed reviewing the historical data provided. A Discounted Cash Flow (DCF) was formulated, NPV and Payback was also calculated.

The three main factors considered in the estimates were case sales trends and demand, inflation and real price increases reflect Calaveras strengthening their brand recognition. The first assumption is that the prices will increase 2% before inflation. The production per ton of grapes and yield per acre increased in 1992 due to the new market strategies. Sales are expected to grow 13% in 1995 after which an estimate of 12%, 6%, and 8% for 1996, 1997 and 1998 respectively, show growth while recognising a shift toward white wines – translating into an annual projection of 10% per for the forecast period – Appendix 5. The tax rate of 37% and inflation rate of 2% is taken into account in the forecast. Therefore the prices per case for each category has 2% price growth as well as 2% inflation rate, the total of 4% is reflected in the forecasted income statement. The key...