Cover page Corporate Finance Project 2

Cover page Corporate Finance Project 2 - Ram Brands Inc....

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Ram Brands Inc. BUSI 408 Project #2 Tuesday/Thursday 12:30 Submitted by: Haoyang Huang Ram Brands Inc. Summary
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We believe Rams Brands Inc. has the right infrastructure and distribution connections to launch the new investment in the gourmet food sector. Based on the NPV analysis we conducted, Ram Brands Inc. should proceed with the investment at the current discount rate as well as the risk adjusted discount rate. The NPV with the current WACC is $338,939, which is acceptable because it is greater than zero. The NPV with the risk adjusted discount rate is $224,885. We calculated the current WACC of 5.513% and risk adjusted rate of 6.526%. Therefore, the “pure play” expected rate of return is higher and decreased the NPV. We strongly believe that with the RBI’s advantage in retail distribution, the initial cost of distributing new products will be cheaper. Besides, RBI’s experience and expertise in marketing and its exiting brand loyalty will also make the new investment in snack food
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This note was uploaded on 02/27/2012 for the course BUSI 407 taught by Professor Bowen during the Spring '11 term at UNC.

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Cover page Corporate Finance Project 2 - Ram Brands Inc....

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