finance case 10

Bull Dog is a craft brewery and pub located in Carrboro, North Carolina. In a span of three years, the owners have established a successful and profitable brewery in a competitive market. However, the owners now need to decide whether they should invest in equipment and labor to bottle some of their best selling beer. This case gives students the opportunity to use skills in reflective thinking, analysis, ethical understanding, and reasoning. After completion of this case, students will be able to:

  • Calculate net present value (NPV),
  • Assess those strategies the company might choose to promote its growth in the brewing industry,
  • Evaluate those strategies to decide on the best fit for the company with the environment and the community,
  • Explain how various pricing strategies would impact the company’s bottom line, and
  • Give detailed reasons for a specific choice.

The Deliverable

Please write a 2 -3 page paper (single-spaced within paragraphs, double-spaced between paragraphs, 1 inch standard margins, 12 PT Times Roman font) answering each of the questions below. Submit your paper in Word and label the file LastName-AOLNPV.docx. Also submit your Excel file to calculate NPV and call that LastName-AOLNPV.xlsx. Do not place your name inside of any of the documents.

  1. Introduction: Summarize the case in your own words. Is the brewery ready to expand?
  2. NPV Calculation: Create an Excel spreadsheet to calculate the net present value of investing in bottling (including the purchase of the label machine and training). Do not include the calculation of NPV in your paper, but describe the NPV for this project in your paper and create a table (call this Figure 1) highlighting the key assumptions made and your answer. Be definitive. Would you or would you not invest in this project?
  3. Optional: Sensitivity Analysis (price of beer): How sensitive is the investment decision to the price of beer? The owners chose to sell its beer at a high price. Would the investment decision be the same if the beer sold for $1.00 less per six-pack at retail? Recalculate the NPV and be definitive. Would you or would you not invest in this project?
  4. CSR: The partners discussed more engagement in other social responsibility initiatives as they continue to grow. Describe initiatives Bull Dog could engage in to help its own triple bottom line (Social, Environmental, and Financial)?
  5. Conclusion: After evaluating NPV, what would you suggest should be Bull Dog’s next steps? In light of the financials, how should this brewery move forward with the project?