Project 1

1723 Words Apr 10th, 2015 7 Pages
ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫׊‬
ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫͑͑͑ͪͩͧ͑͢׊‬
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͵ΖΔΖΞΓΖΣ͑
͵ΖΔΖΞΓΖΣ͑ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡
ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ
͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ

Investing in a Brewpub: A Capital Budgeting Analysis

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Elizabeth Webb Cooper, Ph.D.
Associate Professor of Finance
La Salle University
1900 W. Olney Ave.
Philadelphia, PA 19041 cooper@lasalle.edu Elizabeth Webb Cooper, La Salle University, cooper@lasalle.edu
Case ID 041001

ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫׊‬
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There are 8 pints in a gallon. Samantha estimates that each seat in the restaurant will require about 7 barrels of beer (best case scenario) per year.
She is basing this on the expected number of patrons and on the number of beers each patron is expected to order, on average, throughout the day. She uses some scenario analysis to also include an estimate of 5 barrels of beer per year per seat for a worst-case scenario outlook. They plan to sell 10 types of beer but all will have the same ingredient costs and sales price.

ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫׊‬
ͺΟΥΖΣΟΒΥΚΠΟΒΝ͑΃ΖΤΖΒΣΔΙ͑ͻΠΦΣΟΒΝ͑ΠΗ͑ͲΡΡΝΚΖΕ͑ͷΚΟΒΟΔΖ͑͑͑͑͑ͺ΄΄Ϳ͑ͣͣͣͪ͑‫͑͑͑ͪͩͧ͑͢׊‬
ͧͩͪ͑͑͑͢
͵ΖΔΖΞΓΖΣ͑
͵ΖΔΖΞΓΖΣ͑ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡
ͣͤ͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͢͡ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ
͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑͑ʹΒΤΖ͑΄ΥΦΕΪ͑΄ΖΣΚΖΤ machinery manufacturer, Samantha estimates that it will cost about $15,000 per year (after the first year of operations) in maintenance expenses to keep the machinery running properly.
Meanwhile, Grant looked into any additional costs (beyond ingredients and rent) that the Explore
Café would encounter when they open the brewpub aspect to their business. He figures that he would need at least three additional servers per day at a cost to the restaurant of $80 per day per server (the servers earn most of

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