Location: Idaho Falls, ID
The attached spreadsheet is an analysis of a small shop in Idaho Falls, ID, called the Stick It Shop, which is selling for $79,000. This sale price does not include the price to buy the land or a building, as the company currently rents their office space. However, this spreadsheet model includes what it would cost to buy the building and land instead of renting them. We established the numbers on this spreadsheet based on assumptions made about the market in Idaho Falls. Local market demand, saturation of the local market, general population, and culture of the area were a few of the factors that were taken into account.
In this analysis, several forecasts are displayed, including one that shows the profitability of the company if the business thrives, as well as one that shows the possible losses if the company fails. We have also included a possible option that the company could choose to exercise in future years. To complete the forecast, we have chosen to sell the company in ten years in order to compute the internal rate of return of the company during those ten years.
With these assumptions and inputs, the company is expected to have a return of 7.53%. Though this isn’t as high as other returns that are currently on the market, we believe that this is a much safer investment and that our numbers are fairly realistic. We have incorporated an inflation rate of 1% as well as a mortgage that we believe the company could get with a 4% interest rate. For these reasons, we believe that the sale price of $79,000 for this company is reasonable and this would be a good company to buy, invest in, or even finance.