Case ID: 909B05
Solution ID: 115
Words: 1552
Price $ 75

Spikes Indoor Beach Volleyball and Rock Climbing Inc Case Solution

Case Solution

Spike's Indoor Beach Volleyball and Rock Climbing Inc. takes into account a specialty advertise in the Canadian games industry. As there were no indoor shoreline volleyball courts in Canada, Spikes confronted little rivalry. The volleyball crazed area of London; Ontario gave the ideal geological area to the operations of Spikes. Notwithstanding indoor shoreline volleyball courts, Spikes had likewise included an indoor shake climbing divider, a little eatery with a bar, and had additionally updated the lighting, warming framework, PC servers and had included an extra large flat screen TV in the parlor range.

Excel Calculations

Cash Flow Analysis 

Total Cash Flows

Terminal Value

NPV @ WACC

IRR

Data and Assumptions

Capital Expenditure for Expansion

Incremenetal Revenues for Expansion

Incremenetal Expenses for Expansion

Payback Period

Inventory

Questions Covered

  1. Perform a business size-up.
  2. Analyze the expansion qualitatively.
  3. List all the cash flows associated with the expansion, and classify them as relevant (cash, future and different), recurring or one-time costs.
  4. Perform a differential analysis, with sensitivity analysis where necessary. What is the return on investment? What is the payback period?
  5. As Earl Misener, would you go ahead with the expansion? CASH FLOW RELEVANT? RECURRING OR ONE TIME? Incremental bar revenue Incremental food revenue Additional league fees Beverage COGS Food COGS 5 days food inventory 5 days liquor inventory Accounts payable Accounts receivable Servers Bartender Cooks Maintenance Utilities Insurance Nets and balls Retaining wall/fencing Zoning and permits Stairway Patio furniture Washroom Amortization Bank loan Interest