Escolar Documentos
Profissional Documentos
Cultura Documentos
EXECUTIVE SUMMARY
This case is about a Mexican company, named Bebida Sol. The company is looking into the possibilities of launching a
new product HOLA KOLA. The company has been into the soft drinks market, since 1998. Mexico has the highest per
capita consumption of carbonated soft drinks in the world (163 litres). Now, since Mexico has the highest rate of obesity,
the owner, Mr. Antonio Ortega , sees a potential market of their new product. The product is supposed to be a low priced,
zero-calorie carbonated soft drink. The company wishes to target the low and medium class population, as because, the
branded low-calorie soda consumers were either from the middle or the high class. The rest usually consumed the
regular, high sugar, carbonated soft drinks.
Mr. Antonio is evaluating on various aspects, based on which, he would be in a position to take a decision, whether to
invest in his new venture or not. His company has dramatical rise in sales over the past 3 years. Further, even without
any addition to his business strategy, he has seen significant increase in the net profit margin. The company, having a
solid financial resource, built over time, is set to take a call, based on the various Financial analysis, whether to invest or
not. Based on these assumptions, Mr. Antonio has hired a marketing consultant, paying him a hefty 5 million pesos,
shortly after his report submission, which took around 2 months to complete. Based on the report, the company will now
evaluate the various problems which may arise during the business operations, and how would they possibly get
solutions to the most relevant one. This would enable the company to take a final call.
PROBLEM IDENTIFICATION
As per my observation, the following problems have been identified to be significant, as here under :
1. DEMAND UNCERTAINTY: Since the Mexican market has the highest obesity rate, therefore there seems to be an
increase in demand for low-calorie sodas. The main consumers of these segment are the middle to upper class.
The low class, which the BEBIDA SOL is targeting , basically consume the high sugared carbonated soft drinks. The
company has two assumptions to this :
a) One, that they cannot afford the high priced branded low-calorie soft drinks.
b) Two, that they lack awareness of the product, and therefore, are good with the idea of consuming the highsugared soft drinks.
If point (a) is the case , then the company has reasons to cheer, else their investments may have high risks.
1 | Page
2. CANNIBALISATION: The company has a regular range of carbonated soft drinks, that consists regular colas
carbonates and non- cola carbonates , such as lemon/lime or carbonates. The revenue from sales has dramatically
risen from 642million pesos to 900million pesos over the last 3 years. The entry of the new product can
significantly cannibalize their own to staggering 800,000 pesos of after-tax cash-flow per year.
3. OPPORTUNITY CASH: Mr. Antonio Ortega has a ready unoccupied annex, for which he recently got an offer of
60,000 pesos per year. The amount would obviously come to him without any further investment. On the other
hand, the new venture would demand heavy capital investment, followed by the market risks.
4. IMPACT ON CASH FLOW: Mr. Pedro, the companys general manager, proposed offering a longer collection , to let
the grocers pay in 45 days, in place of the normal 30 days. As per him, this will motivate them to carry the new
product and help the company to achieve higher sales revenue. On the other hand, they wish to remain steady
with the companys normal payment schedule to the sundry creditors. The accounts payable is usually settled in 36
days. This gap of 9 days will put stress on the cash-flow on the company. This proposal, along with the intention of
keeping an inventory of 1month will involve additional working capital, which in turn will involve an interest for the
working capital. All of these will put an impact on the companys cash-flow.
5. IRRELEVANT COST: Mr. Pedro hired a consultant to do a market study after discussing the case with Mr. Antonio .
The market survey cost the company 5 million pesos which Mr. Pedro had paid shortly, after the completion of the
report. This cost cannot be taken as irrelevant ,as this is not part of the decision making part of the project. In fact,
based on the report, the company will decide whether to move ahead or not. This cost, though a necessity for the
decision process, is a significant cash outflow, even before the project has commenced.
are available. Even for the health conscious consumers now, we had a product. The demand has been backed
by the consultants report, and the uncertainty of the future demand of a new product, is the risk which is
associated with high returns product. Higher the risk, higher the profit.
2. CANNIBALISATION: The 800000 Pesos of potential erosion is 5 % of the existing cash flows which is being
absorbed by the new product as an indirect cost, which is 2% of the new product Turnover. Since the new
product is giving a net margin of 19% without loan, 2% of cannibalisation cost can be absorbed easily.
3. OPPORTUNITY CASH: The Rental Income of 60000 Pesos a year is quite small as compared to the revenues to
be earned from the new project. This will not be very crucial point in the decision making for launching the new
project.
4. IMPACT ON CASH FLOW: Though there is a bit stress on the working Capital, but it is a part of the risk to be
taken. The returns on the capital is quite high to absorb the cost of working capital.
5. IRRELEVANT COST: The Cost of research is done to assist the decision for the new product launch. It does not
play any financial role in assisting the decision making.
THE MAIN PROBLEM IN TAKING THE DECISION FOR THE NEW PRODUCT
There are two options available to Antonio - whether he should go for the loan of 10000000 Pesos of
Bank Loan at 16 %.
Below we have analysed this problem with the help of calculations of profitability, NPV and IRR, whether he should
go ahead with the loan or not.
3 | Page
Sales Revenue
7200000
36000000
100
%
7200000
3600000
0
100
%
(129600
00)
Total Revenue
Less: COGS
Raw Material cost@ 1.8 Pesos /liter X 600000
x12
0
0
(1296000
0)
-36%
(360000)
-1%
(2160000)
2052000
0
-6%
Gross Profit
36000000
100
%
-36%
(1296000
0)
-36%
(12960000
)
-36%
(1296000
0)
-1%
-36%
(360000)
-1%
(360000)
-1%
(360000)
-1%
-6%
-6%
-6%
57%
(2160000)
2052000
0
-6%
57%
(2160000)
2052000
0
57%
-2%
(600000)
-2%
(600000)
-2%
57%
-2%
(600000)
-2%
(600000)
(600000)
(60000)
(300000)
-1%
(1600000)
(1000000
0)
-4%
EBIT
36000000
57%
Less: depreciation
36000000
(60000)
-28%
(300000)
(128000
0)
(100000
00)
7200000
100
%
(2160000)
2052000
0
7200000
100
%
(360000)
(216000
0)
205200
00
Operating Expenses
Less : Interest on TL
7200000
(60000)
(60000)
(60000)
-1%
(300000)
-1%
(300000)
-1%
(300000)
-1%
-4%
-3%
-28%
(320000)
(1000000
0)
-1%
-28%
(640000)
(10000000
)
-2%
-28%
(960000)
(1000000
0)
-28%
7960000
22%
8280000
23%
8600000
24%
8920000
25%
9240000
26%
Less: Tax@30%
2388000
7%
2484000
7%
2580000
7%
2676000
7%
2772000
8%
PAT
5572000
15%
16%
6020000
17%
6244000
17%
6468000
18%
Add:Depriciation
10000000
5796000
1000000
0
15572000
1579600
0
4 | Page
10000000
16020000
10000000
16244000
10000000
16468000
Less:Erosion
(800000)
4,00,00,000
0
1080000
0
FCFF
NPV@20%
1,46,63,102
.94
NPV@16%
1,99,38,314
.53
IRR
36%
Payback period
2.26
5 | Page
14772000
(800000)
1499600
0
2%
(800000)
-2000000
-2000000
-2000000
-2000000
-2000000
4438356.
16
4438356.
16
4438356.
16
4438356.1
6
4000000
4438356.
16
1080000
1080000
(127824
7)
4240109.
59
22,40,11
0
1,72,36,1
10
1080000
1080000
1080000
(1278247)
4240109.
589
(1278247)
4240109.5
89
(1278247)
8240109.
589
22,40,110
1,74,60,1
10
22,40,110
1,76,84,11
0
62,40,110
2,19,08,1
10
15220000
2%
(800000)
15444000
1080000
3,89,20,000
3,89,20,000
2%
(1278247)
4240109.
589
22,40,110
1,70,12,1
10
2%
(800000)
15668000
2%
Years
2
Sales Revenue
Unit Selling price
Annual Sales (In Litres) 600000x 12 ( Volume)
0
0
5
7200000
Total Revenue
Less: COGS
0
0
36000000
100
%
0
0
(12960000
)
(360000)
36%
-1%
(2160000)
2052000
0
Gross Profit
Operating Expenses
Energy Cost@50,000 peros/month X 12
Building Rental (Oppourtunity Cost)
General Administrative & Selling Expenses
0
0
0
0
Less: depreciation
5
7200000
5
7200000
36000000
36000000
36000000
(12960000
)
(360000)
(12960000
)
(360000)
(1296000
0)
(360000)
-6%
57
%
(1296000
0)
(360000)
(2160000
)
2052000
0
(2160000)
2052000
0
(2160000)
2052000
0
(2160000)
2052000
0
(600000)
(60000)
(300000)
(10000000
)
-2%
0%
-1%
28%
(600000)
(60000)
(300000)
(1000000
0)
(600000)
(60000)
(300000)
(10000000
)
(600000)
(60000)
(300000)
(10000000
)
(600000)
(60000)
(300000)
(1000000
0)
27%
8%
9560000
2868000
9560000
2868000
9560000
2868000
9560000
2868000
19%
6692000
1000000
0
6692000
6692000
6692000
10000000
10000000
10000000
9560000
2868000
PAT
6692000
Add:Depriciation
10000000
6 | Page
5
7200000
EBIT
Less: Tax@30%
5
7200000
3600000
0
Less:Erosion
(800000)
1669200
0
16692000
15892000
-5,00,00,000
0
0
1080000
0
1080000
-4,78,40,000
FCFF
-4,78,40,000
NPV@20%
2,82,62,875.13
NPV@16%
IRR
Payback period
3,57,70,706.70
44%
1.96
-2%
(800000)
1589200
0
16692000
(800000)
15892000
16692000
(800000)
15892000
4438356.1
64
1080000
4438356.
16
1080000
(1278247
)
4240109.
59
84,80,21
9
2,43,72,2
19
4438356.1
64
1080000
4438356.1
64
1080000
(1278247)
4240109.5
89
(1278247)
4240109.5
89
84,80,219
2,43,72,21
9
84,80,219
2,43,72,21
9
(1278247)
4240109.5
89
84,80,219
2,43,72,21
9
16692000
(800000)
15892000
0
4000000
4438356.1
64
1080000
(1278247)
8240109.5
89
1,64,80,21
9
3,23,72,21
9
CONCLUSION
To Conclude, there is no doubt the project is viable as per the calculations and has a positive NPV. In addition there
is a social cause as well, where the company is selling a product which is not increasing the Obesity rate in the
Country.
Early start will also help the Company to create a Brand Image in the coming years.
7 | Page
The Profitability of the product and the Cash inflow is taking care of all the expense (Cannibalisation Cost,
Opportunity Cost)
Thus Antonio should go ahead with the project without Loan which is helping him to recover the capital cost in
lesser period and in addition the IRR is also higher by 8%.
The Company is also earning higher net profit @ 19% as compared to the existing Products net profit of 5.6% in
2011.
Proposal w/o
Loan
Proposal
with Loan
17%
13%
NPV@20%
2,82,62,875.1
3
1,46,63,102.9
4
NPV@16%
IRR
Payback period
3,57,70,706.7
0
44%
1.96
1,99,38,314.5
3
36%
2.26
Particlars
Net Profit %
after
cannibalistion
8 | Page
Sales
- YOY growth
Cost of goods sold
- % of sales
Gross margin
Research and development
- % of sales
Selling, general and administrative
- % of sales
Operating income
Interest expense
- Interest rate %
Other income (expenses)
Income before income taxes
9 | Page
Forecast
2007
2008
2009
2010
2011
2012
$77,131
$62,519
81.1%
$14,612
$80,953
5.0%
$68,382
84.5%
$12,571
$89,250
10.2%
$72,424
81.1%
$16,826
$1,20,000
34.5%
$97,320
81.1%
$22,680
$1,44,000
20.0%
$1,16,784
81.1%
$27,216
$1,44,000
0.0%
$1,16,784
81.1%
$27,216
$3,726
4.8%
$6,594
8.5%
$4,292
$4,133
5.1%
$7,536
9.3%
$902
$4,416
4.9%
$7,458
8.4%
$4,952
$6,000
5.0%
$10,032
8.4%
$6,648
$7,200
5.0%
$12,038
8.4%
$7,978
$7,200
5.0%
$12,038
8.4%
$7,978
$480
$652
$735
-$39
-$27
-$35
$937
9.25%
-$50
$1,323
9.25%
-$50
$1,565
9.25%
-$50
$3,773
$223
$4,182
$5,661
$6,604
$6,363
Income taxes
- % of income before taxes
Net income
Earnings per share
$1,509
40.0%
$2,264
$89
39.9%
$134
$1,673
40.0%
$2,509
$2,264
$2,642
$2,545
$3,396
$3,963
$3,818
$1.52
$0.09
$1.68
$2.28
$2.66
$2.56
Exhibit 1 (continued)
Balance Sheet ($000s except shares outstanding and book value per share)
Actual
Cash
- % of sales
Accounts receivable
- Days of sales
Inventories
- Days of COGS
Prepaid expenses
- % of sales
Total current assets
Property, plant & equipment at cost
Less: Accumulated depreciation
Net property, plant & equipment
Total assets
10 | P a g e
Forecast
2007
2008
2009
2010
2011
2012
$2,536
3.3%
$10,988
33
$9,592
56
$309
0.3%
$23,425
$2,218
2.7%
$12,864
33
$11,072
59
$324
0.2%
$26,478
$2,934
3.3%
$14,671
37
$11,509
58
$357
0.2%
$29,471
$3,960
3.3%
$19,726
60
$13,865
52
$480
0.4%
$38,031
$4,752
3.3%
$23,671
60
$16,638
52
$576
0.4%
$45,637
$4,752
3.3%
$23,671
60
$16,638
52
$576
0.4%
$45,637
$5,306
$792
$4,514
$6,116
$1,174
$4,942
$7,282
$1,633
$5,649
$8,182
$2,179
$6,003
$9,082
$2,793
$6,290
$9,982
$3,474
$6,508
$27,939
$31,420
$35,120
$44,034
$51,926
$52,145
Accounts payable
- Days purchases
Notes payable
$3,084
30
$6,620
$4,268
38
$8,873
$3,929
33
$10,132
$4,799
30
$14,306
$5,759
30
$16,914
$5,759
30
$13,325
Accrued expenses
$563
$591
$652
$876
$1,051
$1,051
$151
10%
$478
0.6%
$10,896
$9
10%
$502
0.6%
$14,243
$167
10%
$554
0.6%
$15,434
$226
10%
$744
0.6%
$20,951
$264
10%
$893
0.6%
$24,881
$255
10%
$893
0.6%
$21,282
$15
$7,980
$9,048
$17,043
$15
$7,980
$9,182
$17,177
$15
$7,980
$11,691
$19,686
$15
$7,980
$15,087
$23,082
$15
$7,980
$19,050
$27,045
$15
$7,980
$22,868
$30,863
$27,939
$31,420
$35,120
$44,034
$51,926
$52,145
14,91,662
14,91,662
14,91,662
14,91,662
14,91,662
14,91,662
$11.43
$11.52
$13.20
$15.47
$18.13
$20.69
Return on equity
Interest coverage ratio (times)
Notes payable / accounts receivable
Notes payable / shareholders' equity
Total liabilities / shareholders' equity
13.3%
8.9
60.2%
38.8%
63.9%
0.8%
1.4
69.0%
51.7%
82.9%
12.7%
6.7
69.1%
51.5%
78.4%
14.7%
7.1
72.5%
62.0%
90.8%
14.7%
6.0
71.5%
62.5%
92.0%
12.4%
5.1
56.3%
43.2%
69.0%
11 | P a g e
Micron Technology
D = book value of debt (4-30-2010)
BVE = book value of equity (4-30-2010)
MVE = market value of equity (4-30-2010)
$2,760
$5,603
$7,925
74.2%
1.25
1.03
$975
$4,157
$9,135
25.8%
9.6%
90.4%
1.36
1.28
$0
$276
$699
0.0%
100.0%
1.00
1.00
Exhibit 2 (continued)
1.10
$10,132
$37,292
21.4%
78.6%
Since Flash is at the limit of its current loan agreement, management believes this is a
higher proportion of debt finance than optimal. As stated in the case, management has
set target capital structure weights equal to 18% debt and 82% equity.
18.0%
82.0%
1.10
1.25
3.70%
1.25
6.00%
11.20%
18.00%
7.25%
40.00%
82.00%
11.20%
9.96%
(a) at 18% weight of debt Flash will be within the 70% of accounts receivable limit of
the existing loan agreement, thus the 7.25% cost of debt capital. If Flash was over
this limit and changed to factoring, the cost of debt capital would increase to 9.25%,
and the equity beta and cost of equity capital would also increase.
2012
2013
2014
2015
Total
Investment in equipment
2010
-$2,200
$5,648
26.15%
-$5,648
$7,322
26.15%
-$1,674
$7,322
26.15%
$0
$2,877
26.15%
$4,446
$1,308
26.15%
$1,569
$0
26.15%
$1,308
$0
$21,600
$17,064
79.00%
$0
$1,806
8.36%
$300
$2,430
$972
$1,458
$440
$1,898
$28,000
$22,120
79.00%
$0
$2,341
8.36%
$0
$3,539
$1,416
$2,124
$440
$2,564
$28,000
$22,120
79.00%
$0
$2,341
8.36%
$0
$3,539
$1,416
$2,124
$440
$2,564
$11,000
$8,690
79.00%
$0
$920
8.36%
$0
$1,390
$556
$834
$440
$1,274
$5,000
$3,950
79.00%
$0
$418
8.36%
$0
$632
$253
$379
$440
$819
$225
$2,564
$7,009
$2,843
$2,127
Sales
Cost of goods sold (includes equipment depreciation)
- % of sales
Research & development
Selling, general & administrative
- % of slaes
Launch promotion
Income before income taxes
Income taxes @ 40%
Net income
Depreciation of equipment @ 20% SLM
Cash flow from operations
Total cash flow
NPV @ cost of capital
IRR
MIRR
-$7,848
$3,014
21.9%
17.3%
Cost of capital
9.96%
15 | P a g e
$2,200
Flash Memory,
Inc.
Exhibit 4 Change in Forecasted Financial
Statements due to Acceptance of Investment in New
Product Line
Financial
Statement
Account ($000s)
Actual
200 200 200
7
8
9
Sales
Cost of goods
sold (includes
equipment
depreciation)
Research and
development
Selling, general
and administrative
(includes launch)
Increase in
operating income
Cash (3.3% of
sales)
Accounts
receivable (60
DSO)
16 | P a g e
Forecast
2010
2011
2012
$21,6
00
$28,000
$17,0
64
$22,120
$0
$0
$2,10
6
$2,43
0
$2,341
$3,539
$713
$924
$3,55
1
$4,603
Inventories (52
days of COGS)
Prepaid expenses
(0.4% of sales)
Net property,
plant & equipment
Accounts payable
(60 days of
purchases)
Accrued
expenses (0.73%
of sales)
Other current
liabilities (0.62%
of sales)
$2,43
1
$2,20
0
$3,151
$86
$1,76
0
$112
$1,320
$842
$1,091
$158
$204
$134
$174
26.15
%
26.15%
For
informational
purposes only:
NWC % of sales
17 | P a g e
Exhibit 5 (continued)
Balance Sheet ($000s except shares outstanding and book value per share)
2010
Forecast
2011
2012
$2,934
$14,671
$11,509
$357
$29,471
$3,960
$19,726
$13,865
$480
$38,031
$5,465
$27,222
$19,069
$662
$52,418
$5,676
$28,274
$19,789
$688
$54,427
$6,116
$1,174
$4,942
$7,282
$1,633
$5,649
$10,382
$2,179
$8,203
$11,282
$3,233
$8,050
$12,182
$4,354
$7,828
$27,939
$31,420
$35,120
$46,234
$60,467
$62,255
Accounts payable
Notes payable
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
$3,084
$6,620
$563
$151
$478
$10,896
$4,268
$8,873
$591
$9
$502
$14,243
$3,929
$10,132
$652
$167
$554
$15,434
$4,799
$16,506
$876
$226
$744
$23,151
$6,601
$22,897
$1,209
$353
$1,027
$32,086
$6,850
$18,719
$1,256
$374
$1,066
$28,265
$15
$7,980
$9,048
$17,043
$15
$7,980
$9,182
$17,177
$15
$7,980
$11,691
$19,686
$15
$7,980
$15,087
$23,082
$15
$7,980
$20,386
$28,381
$15
$7,980
$25,995
$33,990
Cash
Accounts receivable
Inventories
Prepaid expenses
Total current assets
Property, plant & equipment at cost
Less: Accumulated depreciation
Net property, plant & equipment
Total assets
18 | P a g e
2007
Actual
2008
2009
$2,536
$10,988
$9,592
$309
$23,425
$2,218
$12,864
$11,072
$324
$26,478
$5,306
$792
$4,514
$27,939
$31,420
$35,120
$46,234
$60,467
$62,255
14,91,662
14,91,662
14,91,662
14,91,662
14,91,662
14,91,662
$11.43
$11.52
$13.20
$15.47
$19.03
$22.79
Return on equity
Interest coverage ratio (times)
Notes payable / accounts receivable
Notes payable / shareholders' equity
Total liabilities / shareholders' equity
13.3%
8.9
60.2%
38.8%
63.9%
0.8%
1.4
69.0%
51.7%
82.9%
12.7%
6.7
69.1%
51.5%
78.4%
14.7%
7.1
83.7%
71.5%
100.3%
18.7%
6.8
84.1%
80.7%
113.1%
16.5%
5.4
66.2%
55.1%
83.2%
19 | P a g e
2010
Forecast
2011
2012
$89,250
$72,424
$16,826
$1,20,000
$97,320
$22,680
$1,65,600
$1,33,848
$31,752
$1,72,000
$1,38,904
$33,096
$4,133
$7,536
$902
$4,416
$7,458
$4,952
$6,000
$10,032
$6,648
$7,200
$14,144
$10,408
$7,200
$14,379
$11,517
$480
-$39
$652
-$27
$735
-$35
$735
-$50
$687
-$50
$1,112
-$50
$3,773
$223
$4,182
$5,863
$9,671
$10,355
Income taxes
Net income
$1,509
$2,264
$89
$134
$1,673
$2,509
$2,345
$3,518
$3,868
$5,802
$4,142
$6,213
$1.52
$0.09
$1.68
$1.96
$3.24
$3.47
Sales
Cost of goods sold
Gross margin
Research and development
Selling, general and administrative
Operating income
Interest expense
Other income (expenses)
Exhibit 6 (continued)
20 | P a g e
2007
Actual
2008
2009
$77,131
$62,519
$14,612
$80,953
$68,382
$12,571
$3,726
$6,594
$4,292
Balance Sheet ($000s except shares outstanding and book value per share)
2010
Forecast
2011
2012
$2,934
$14,671
$11,509
$357
$29,471
$3,960
$19,726
$13,865
$480
$38,031
$5,465
$27,222
$19,069
$662
$52,418
$5,676
$28,274
$19,789
$688
$54,427
$6,116
$1,174
$4,942
$7,282
$1,633
$5,649
$10,382
$2,179
$8,203
$11,282
$3,233
$8,050
$12,182
$4,354
$7,828
$27,939
$31,420
$35,120
$46,234
$60,467
$62,255
Accounts payable
Notes payable
Accrued expenses
Income taxes payable
Other current liabilities
Total current liabilities
$3,084
$6,620
$563
$151
$478
$10,896
$4,268
$8,873
$591
$9
$502
$14,243
$3,929
$10,132
$652
$167
$554
$15,434
$4,799
$9,476
$876
$235
$744
$16,130
$6,601
$15,338
$1,209
$387
$1,027
$24,561
$6,850
$10,550
$1,256
$414
$1,066
$20,136
$15
$7,980
$9,048
$17,043
$15
$7,980
$9,182
$17,177
$15
$7,980
$11,691
$19,686
$18
$14,877
$15,209
$30,104
$18
$14,877
$21,012
$35,907
$18
$14,877
$27,224
$42,119
$27,939
$31,420
$35,120
$46,234
$60,467
$62,255
Cash
Accounts receivable
Inventories
Prepaid expenses
Total current assets
Property, plant & equipment at cost
Less: Accumulated depreciation
Net property, plant & equipment
Total assets
21 | P a g e
2007
Actual
2008
2009
$2,536
$10,988
$9,592
$309
$23,425
$2,218
$12,864
$11,072
$324
$26,478
$5,306
$792
$4,514
14,91,662
14,91,662
14,91,662
17,91,662
17,91,662
17,91,662
$11.43
$11.52
$13.20
$16.80
$20.04
$23.51
Return on equity
Interest coverage ratio (times)
Notes payable / accounts receivable
Notes payable / shareholders' equity
Total liabilities / shareholders' equity
13.3%
8.9
60.2%
38.8%
63.9%
0.8%
1.4
69.0%
51.7%
82.9%
12.7%
6.7
69.1%
51.5%
78.4%
11.7%
9.1
48.0%
31.5%
53.6%
16.2%
15.1
56.3%
42.7%
68.4%
14.8%
10.4
37.3%
25.0%
47.8%
2010
No Investment in New
Product Line
Sell No New Stock
Borrow at 9.25%
2011
2012
$2.28
7.1
14.7%
$2.66
6.0
14.7%
$2.56
5.1
12.4%
72.5%
71.5%
56.3%
62.0%
62.5%
43.2%
90.8%
$14,306
69.0%
$13,325
2010
92.0%
$16,914
Invest in the New Product
Line
2011
$2.28
7.1
14.7%
$3.55
6.8
18.7%
$3.76
5.4
16.5%
83.7%
84.1%
66.2%
71.5%
80.7%
55.1%
100.3%
$16,506
113.1%
$22,897
Invest in the New Product
83.2%
$18,719
2012
Line
24 | P a g e
2010
2011
2012
$1.96
9.1
11.7%
$3.24
15.1
16.2%
$3.47
10.4
14.8%
48.0%
56.3%
37.3%
31.5%
42.7%
25.0%
53.6%
$9,476
68.4%
$15,338
47.8%
$10,550