Location: Las Cruces, NM
KN Enterprises is a business located in Las Cruces, New Mexico that sells a variety of golf cars, automobiles, and ATVs. KN Enterprises was previously listed for sale at $900,000. Our model includes a projected income statement and balance sheet for the business that is based on assumptions that include average pricing for used automobiles and ATVS and assumptions for salaries, utilities, etc. based on the rates for the Las Cruces area. These figures may vary based on location, size, and demand from the community. Our model allows for all inputs to be changed to manipulate the figures based on personal preference or calculations. We included a tab with our assumption citations as well.
We projected that, as a growing business, net income would start out as negative, but this would increase based on increases in demand and sales. This takes into account the fact that this type of business has a very large inventory with a very large sum of money tied up in working capital.
The net present value for the business, as we calculated it, would be about -$800,000 for the first ten years. We do recognize that this could increase and become positive in the future because it is a growing business, but investing would be a big risk.
Within our model with the input values we selected, the business would have a weighted average cost of capital equal to approximately 8%, and also an internal rate of return equal to 8%.
For these reasons, we believe that the listed price of $900,000 is a reasonable price for this business.