Sinel_MelanieWeek10Assignment4FIN317.docx - FINANCING AN EXPANSION 1 Assignment Four Financing an Expansion Melanie Sinel Strayer University FIN317 Dr

# Sinel_MelanieWeek10Assignment4FIN317.docx - FINANCING AN...

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FINANCING AN EXPANSION 1 Assignment Four: Financing an Expansion Melanie Sinel Strayer University FIN317 Dr. Ali Said December 6, 2016 Abstract This paper will examine Alpharetta Equestrian Magazine after twelve years of extremely successful business. The business has spread to multiple locations and the business is ready to purchase a competitor. The paper will review one technique for valuation of the competitor. Next, the paper will analyze the various financial tools available and determine which tool will
FINANCING AN EXPANSION 2 be the most useful in assessing whether the company can afford the purchase. The paper will then assume the competitor will be purchased and examine the debt and equity market options available to help finance the new purchase. Finally, the paper will show a cross comparison of the debt and equity options and determine where to obtain the additional funding necessary for the purchase.
FINANCING AN EXPANSION 3 Use one of the valuation techniques identified in Chapters 10 and 11 to calculate the value of the competitor you wish to purchase. Valuation of a company allows a person or investor to decide if an investment is worth pursuing. The purchase type will vary depending on the competitor. In this scenario, the company is looking at purchasing Horse & Rider Magazine. The magazine is already well known and will provide extra to what already exists. The purchase would also make it so there is one less competitor to compete against. One valuation technique is to measure present values. The valuation will show how much the company is worth in the present. Pre-money valuation is the value of a business currently with no changes. Pre-Money Present Valuation = 50,000,000 shares x \$2 per share = \$100,000,000 Analyze the various financial tools available to you to determine the tools that will be most helpful in assessing whether your company can afford to purchase the competitor. Support your response. A business has many ways to assess the financial position. The company can look at statements, such as cash flow or balance sheets to analyze the financial health of the business.

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