Langtry Falls Expansion Plan Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Langtry Falls Expansion Plan Case Study Help

Question: 7

Hurdle Rate

The selected WACC for the Langtry would be the industry average WACC yielded form the beta of Bloomberg, which is 5.02%. The greater the WACC, the greater would be the expected. Bloomberg is a sophisticated and trustedwebsite for the data collections, and it is widely used by many companies for WACC calculations’ data. In addition to this, it could be seen that the WAAC form the Blomberg beta is yielding larger expected return as compared to the Google finance beta information. Thus, it is concluded that the company should select the largest WACC, which could be acquired by the calculations from the Bloomberg’s’ beta.

Recommendations

After evaluating the entire data with the help of given information and calculating different WACCs for each competitors; it is recommended for the company to select the WACC from the beta calculations given by Bloomberg, because it is yielding larger return as compared to the WACC from Google finance information. The company should expand its production capacity, because the WACC is greater and would yield an increasing returns form the increased production capacity. In addition to this, it is very important for the company to expand its production facility, because of the growing and fast changingneeds of customers, with an inclusion of maintaining the suitability in growth as compared to its competitors.

Conclusion

To conclude, Roxanana Garner is an individual who transformeda small business “Lagantry Falls” into a high-end and fast-growing leather fashion business. Roxanana Garnerdecided to make a major expansion in the company’s production capacity, in 2017. Garner is concerned about the returns that would be generated after the expansion plan. An in-depth calculation is carried out, in order to examine the Two WAACs for each competitors, with the help of provided data in the case, along with examining the two different betas from Google finance and Bloomberg. The selected WACC for the Langtry would be the industry average WACC, yielded form the beta of Bloomberg, which is 5.02%. In addition to this, it is very important for the company to expand its production facility because of the growing and rapidly changing needs of its customers..............................................

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