Location: Atlanta, GA
The attached spreadsheet model shows a detailed financial forecast for Fabmaster Corporation, located in Atlanta, GA. Some of the information included in this forecast includes an income statement and balance sheet forecasted for the next ten years, as well as the expected value of assets sold should the company go bankrupt. Our analysis also includes information about the company’s cost of capital and expected rate of return.
The assumptions and outside data we used in our forecast are included in their own separate tabs. The information we gathered is based on current market rates and average industry values. Data may vary across companies in the industry, but we feel that the values we used represent a reasonable average based on the company’s size.
Given the information available to us and the data that we used, we estimated the company’s weighted cost of capital to be about 10%. The internal rate of return is also slightly higher than 10%.
For our bankruptcy forecast, we believe that the company would be able to sell its secured assets to completely pay off its mortgage loan. The secured assets would likely go for 85% of their value since real estate tends to appreciate. Therefore, we believe the company should not have a very difficult time receiving a good mortgage loan with a relatively low rate. The unsecured assets would sell for significantly less than the secured assets. The extra bank loan would not fare so well. They would only be paid about 19 cents on the dollar.