Location: San Jose, CA
The Dennis Baik office is a small dentist practice that provides implants and other cosmetic services to people in the south San Jose, CA area. This practice is currently listed for sale for $195,000, which includes all of the inventory and equipment but not the patient records.
In this model, we include a formal income statement and balance sheet for the office based on the market assumption in the area. We linked all of our assumptions to our balance sheet, which allows us to better assess and change the pricing depending on demand from our customers. We projected three possibilities of market performance. This allows us to better understand both the good and the bad of this business decision. These possibilities also show the risk in entering this market. We chose to make up 80% of our cash through a mortgage and the remaining 20% through common stock. We calculated a 7.1%% WACC and a 6.89% internal rate of return.