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    Carmen María Córdova Sebastián Auz Oscar López

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    Sebastian Auz
    This document discusses the initial investment considerations for a proposed craft brewery project in Mexico. It lists the various machinery, equipment, and other startup costs totaling over $1.5 million USD. It also addresses questions about including taxes, computer equipment, depreciation calculations, salvage value, salary, missing projections, and the impact on their restaurant business. Risks discussed include tax changes, equipment depreciation, and lower than forecasted sales. Overall the timing appears reasonable given their goals of establishing a culture and entering the growing Mexican craft beer market.

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    Carmen María Córdova Sebastián Auz Oscar López

    Uploaded by

    Sebastian Auz
    22 views2 pages
    This document discusses the initial investment considerations for a proposed craft brewery project in Mexico. It lists the various machinery, equipment, and other startup costs totaling over $1.5 million USD. It also addresses questions about including taxes, computer equipment, depreciation calculations, salvage value, salary, missing projections, and the impact on their restaurant business. Risks discussed include tax changes, equipment depreciation, and lower than forecasted sales. Overall the timing appears reasonable given their goals of establishing a culture and entering the growing Mexican craft beer market.

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    Cerveceria minerva

    Original Title

    Caso Minerva

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    This document discusses the initial investment considerations for a proposed craft brewery project in Mexico. It lists the various machinery, equipment, and other startup costs totaling over $1.5 million USD. It also addresses questions about including taxes, computer equipment, depreciation calculations, salvage value, salary, missing projections, and the impact on their restaurant business. Risks discussed include tax changes, equipment depreciation, and lower than forecasted sales. Overall the timing appears reasonable given their goals of establishing a culture and entering the growing Mexican craft beer market.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    22 views2 pages

    Carmen María Córdova Sebastián Auz Oscar López

    Uploaded by

    Sebastian Auz
    This document discusses the initial investment considerations for a proposed craft brewery project in Mexico. It lists the various machinery, equipment, and other startup costs totaling over $1.5 million USD. It also addresses questions about including taxes, computer equipment, depreciation calculations, salvage value, salary, missing projections, and the impact on their restaurant business. Risks discussed include tax changes, equipment depreciation, and lower than forecasted sales. Overall the timing appears reasonable given their goals of establishing a culture and entering the growing Mexican craft beer market.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Carmen María Córdova

    Sebastián Auz
    Oscar López

    1. What should be included in the initial investment?

    -Machinery, transport, administration and estimated installation costs: US$245,000* plus


    15% Value Added Tax (VAT). Useful life: 20 years. Recovery period (fiscal): 10 years.

    -Steam boiler, cold room, electric and hidraulic equipment and other adjustments to the
    warehouse: $1.3 million pesos plus 15% VAT. Useful life: 20 years. Recovery period (fiscal):
    10 years.

    -Barrels (50 of 30 liters each and 30 of 60 liters each), draft towers (10): US$12,000* plus
    15% VAT. Useful life: 4 years. Recovery period (fiscal): 10 years. -- Barrel cleaning and filling
    equipment: US$8,000* plus 15% VAT. Useful life: 20 years. Recovery period (fiscal): 10 years.

    -Transportation equipment (secondhand small truck): approximately $100,000 pesos


    (including 15% VAT) Useful life: 4 years. Recovery period (fiscal): 4 years.

    -Office equipment: $20,000 pesos (including 15% VAT). Useful life: 4 years. Recovery period
    (fiscal): 10 years.

    -Computer equipment: $0 (because Jesús and Alejandro were planning to bring their own
    computers to the company).

    -Working capital: $500,000 pesos, of which inventories $300,000 (including 15% VAT).

    1. Should the value added tax (VAT) be included in the cash flows?

    No it should not.

    2. Do you think it is correct/fair to leave the computer equipment out of the initial
    investment?

    No. These computers are part of the company even if they are personal, they are
    used for working purposes so they should be included. Buying and depreciation of
    these computers will impact the company. They are parts of the assets.

    3. How would you calculate the depreciation?

    The initial cost of the good divided by the useful life time of the good.

    4. Would you include the Salvage Value? If yes, how would you quantify this value?

    Yes, because when already having the cost after depreciation, there can be a
    comparison with the book value over the sale value.

    5. Would it be correct/fair to leave the salary for Jesus out for the first 6 months?
    No. Jesus work has to be recompensed and even if the salary is not payed, then
    income of the company is higher, therefore there is more taxes to pay. Jesus does
    not have to work for free.

    6. What information do you believe is missing? (Do you have enough information?)
    Does all the information seem reliable/realistic?

    The projection of sales is not realistic, also the scenarios are not realistic, they don’t
    portray the risks and WC is also no realistic.

    7. What would be the impact on the Restaurant Tierra de Malta? How would you
    include that in your analysis?

    The initial investment because they are different company’s and should not be
    managed as one. The company’s taxes and workforce will affect differently as well.

    2. Cost of capital and risk analysis

    1. How would you determine the cost of capital? Would you also require 8%?

    By forecasting the sales, NPV, Initial investment, IRR and the MARR to see if it is
    higher and lower than 8%, to then see if it is an acceptable rate.

    2. What are the risks involved in the project?

    -Implementation of higher taxes

    -High and fast depreciation of machinery. Secondhand machines don’t work as well

    -Low market growth, not selling as much as forecasted

    3. Is the timing, right? What are the advantages and disadvantages of delaying the
    decision?

    If timing wouldn’t be right, then that would be because their strategy is different,
    but they are not focused only on sales but creating a culture, a well-structured
    business model and entering the beer marketing in Mexico. The advantages is that
    there are enough products to satisfy the increasing demand of craft beer in Mexico.

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