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Calaveras Vineyard Case Study Solution

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The Calaveras Vineyard, established as early as in 1883 in California initially aimed at making wine for the Catholic Church. The man behind this family owned business was Esteban Calaveras. Over the years the ownership has been changing but improvements in brand quality and standards remained the key to success. Technological changes also improved market positions chiefly through capital improvements. New strategies helped the company secure good positions regarding cash flow. Like every other company, Calaveras too had tough competitors Calaveras products like estate wines and selected vineyard wines are popular products. To keep itself in the race, it also has medium quality California wine and lesser quality Generic wines. The …show more content…

This was done with the help of a weighted average unlevered beta, the market risk premium and the risk free rate. The risk free rate of 5.85 % has been acquired from the 30 year T bond rates. The beta was found out using the three other comparable companies and their unleveraged betas. With help of all these values the discount rate of 10.847% was calculated which contributed in discounting the cash flows and obtaining the present value of cash flows. The continuing value for Calaveras has been estimated using the key value driver formula which was found out to be $ 7019.715. The total value of the firm has been calculated with the help of PV of cash flows and the continuing value and it shows an amount of …show more content…

Before lending an assessment of Capital is made. The owners of Calaveras and their commitment are to be seen as they have been regularly involved in sustainable investment activities which is a positive sign for the company. Looking at the management, the Vice President has bought almost 85% of total equity and the rest 15% by the operational manager, all these adds to show the confidence of management in the company and the motivation shown in the development of the company. It also adds to the value created and the increase in volume base of the

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