Location: Twin Harbors, MN
The attached spreadsheet model is for the Superior Shores Resort in Twin Harbors, Minnesota. The resort is currently listed for sale for approximately $20,000,000. This model contains a pro forma income statement and balance sheet for the resort’s hotel, conference, wedding, and restaurant services. This model is based on market assumptions from the industry. From the four industries mentioned earlier, we have also derived an analysis of the cost of capital and internal rate of return forecasted for the company. Our model allows variables to be input into the computations through the assumptions page. The citations for the given values can be found in the last sheet of the workbook.
With the selected inputs, the resort has a cost of capital of 6.6%, and the internal rate of return is also 6.6%, due to a goodwill of $1,093,000. The book value of the assets is equal to $33,724,000. Given our assumptions, we believe the sale value of the company is significantly discounted. The preferred debt to equity mix assumed in this model is 75% debt and 25% equity. This would be an acceptable debt to equity ratio if the sale was a leveraged buyout. In the model, all yellow highlighted cells represent inputs that are adjustable. Non-highlighted cells are calculations rather than inputs. The dashboard is located on the Hotel – Resort Details sheet and can be used for quick analysis of investment decisions.