Bentley’s Home Collection

Location: Kamuela, HI


Bentley’s Home Collection in Kamuela, Hawaii is listed for sale on  The company is asking $230,000 for the business as of April 2, 2014. Bentley’s Home Collection sells home collection items such as clothing, shoes, handbags, jewelry, and home furnishings. The main customers of this business are tourists of Hawaii.

The attached spreadsheet includes a pro forma income statement and balance sheet, an analysis of potential bankruptcy, and an analysis of real options for the company.  The pro forma forecasts include the internal rate of return, net present value, and weighted average cost of capital. These key indicators for the business are affected by the inputs for the income statement.  These inputs have been determined based on industry and locational research and can be changed to come up with different scenarios.  

From our analysis, we recommend purchasing the company.  The internal rate of return we computed was 7.47%, while the weighted average cost of capital was only 7.21%.  With these computations, the net present value for a ten year pro forma forecast was close to $300,000. These calculations are assuming a debt/equity ratio close to 75/25 which is quite conservative.  Overall, we believe a price of $230,000 is a value price for this business. The recommended asking price that we came up with from our analysis is $300,000.

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