Alternative investments
1) Show your operating projections over the next five years and the profit projection in year 5 if you acquire the firm using leverage buyout. Consider this as your base case scenario. Briefly explain and discuss your numbers. You want to make sure that the readers know what you are doing. (10 marks) (300-400 words)
2) Conduct scenario testing by altering the choices you made above. You want to create two additional scenarios, ‘best’ and ‘worst’ scenarios. Clearly, ‘best’ scenario would be the scenario where the firm is valued more. ‘Worst’ scenario is where the firm is valued less. Briefly explain your assumptions and repeat (1) above and show your operating projections for the next five years and the profit projection in year 5 in these two additional scenarios. Briefly explain and discuss the sensitivity of your main findings based on your scenario testing. (10 marks) (300-400 words)
3) You generally require investments to triple in value over a 5-year period. Based on your above analysis discuss why you would, or would not, acquire this company (in 100-150 words). (4 marks)
4) Assume you decide to invest in the business. In 100-150 words, briefly explain the due diligence that you would conduct before finalizing the deal. (6 marks)
