Location: Sedona, AZ
The attached spreadsheet is a model for an art gallery located in Sedona, Arizona. Exposures International Gallery of Fine Art is one of the largest fine art galleries in the world. For the past fifteen years, the gallery has earned a reputation as a national trend setter. The owners and creators are passionate about presenting art with honesty, integrity, and love, but they are ready to pass the business on to someone young to keep the business going.
The listed price is currently $475,000. This price however did not include a building. We decided for the sake of the project we would purchase a building at the time we purchase the business. The total price would be $1,068,000.
This model includes a pro forma income statement and balance sheet for the restaurant, based on market assumptions in the area, and an analysis of the costs of capital and internal rate of return forecasted for the art gallery. The model also includes an option. We did a bad and a good scenario based on sales numbers. The model allows variables to be changed for all major inputs of the computations.
With the input values that we chose, the weighted cost of capital and the internal rate of return are equal at 11%. After looking at the data, we have concluded that the purchasing both the business and the building would not be worth it. We would not suggest investing in this business.