Calaveras Vineyards

Chiranjib Das (PGP28089)

1) Prepare income statement from raw data given to you in the case.
Solution:
Sales
1994 sales
Gross

Estates
Sauvignon
Blanc
Cabernet
Sauvignon

1995 sales

$/
Case

1994
COGS
('000s
$)

51.71

232.70

Margi
n%

Cases
('000s
)

50

1996 sales

$/ Case

1996
COGS
('000s
$)

1998 sales
Ca
ses
('0
00
$/
s)
Case

$/
Case

1995
COGS
('000s
$)

12

53.80

322.80

14

55.97

391.79

14

58.23

407.61

16

60.58

484.64

Cases
('000s
)

Case
s
('00
0s)

1997 sales
Cas
es
('0
00s
)
$/ Case

1997
COGS
('000s $)

1998
COGS
('000s
$)

50

50.28

125.70

52.31

156.93

54.43

163.29

56.63

169.89

58.91

206.19

Petite Sirah
Select
Vineyards

50

2.5

51.24

64.05

53.31

79.97

55.46

83.19

57.70

86.55

60.04

90.06

Chardonnay
Sauvignon /
Fume Blanc
White /
Rose
Zinfandel

40

16

42.92

412.03

19

44.65

509.01

22

46.45

613.14

24

48.33

695.95

24

50.28

724.03

38

41.77

207.18

43.46

215.56

45.22

224.29

47.04

233.32

48.94

242.74

38

41.98

52.06

3.5

43.68

94.79

45.44

140.86

47.28

146.57

49.19

152.49

Petite Sirah
Chenin
Blanc

36

35.89

114.85

37.34

119.49

38.85

124.32

40.42

129.34

42.06

134.59

36

1.728

36.57

40.44

38.05

0.00

39.58

0.00

41.18

0.00

42.85

0.00

Other

36

33.92

21.71

35.29

0.00

36.71

0.00

38.20

0.00

39.74

0.00

29

10

24.75

175.73

10

25.75

182.83

10

26.79

190.21

10

27.87

197.88

10

29.00

205.90

29

2.5

22.17

39.35

2.5

23.07

40.95

2.5

24.00

42.60

2.5

24.97

44.32

2.5

25.98

46.11

Hotels
Gigantic
Airlines

38

41.51

102.94

43.19

107.11

44.93

111.43

46.75

115.94

120.63

16.5

41.30

422.50

16.5

42.97

439.58

16.5

44.71

457.38

46.51

475.80

4
16.
5

48.64

38

4
16.
5

48.39

495.03

Altar wines

38

3.5

45.90

99.60

3.5

47.76

103.64

3.5

49.69

107.83

51.69

112.17

116.70

49

2.79

59.77

85.05

2.79

62.19

88.49

2.79

64.70

92.06

67.31

95.78

3.5
2.7
9

53.78

Winery

3.5
2.7
9

70.03

99.65

California

Generic
White table
wine
Red table
wine
Special
accounts

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Calaveras Vineyards
Chiranjib Das (PGP28089)

Depreciation & Debt

Capital Asset
Land
Plant & Equipment
SL Depreciation
A/c receivable
Inventory
Revolving loan
Term loan outstanding
Interest payable

1994
1124
582
116.4

1995
1124
832
166.4

1996
1124
1082
216.4

1997
1124
1332
266.4

1998
1124
1582
316.4

370.41
2461.14
2160.70
1600
357.27

419.26
2742.39
2413.17
1200
343.25

468.14
2911.11
2581.25
800
321.22

496.71
3118.76
2761.27
400
300.32

534.78
Unknown
Unknown
0
Unknown

Income Statement
Income statement of Calaveras Vineyards:
(all figures in '000s $)
1994

1995

1996

1997

1998

Sales Revenue

3704.12

4192.61

4681.41

4967.09

5347.82

COGS

2195.88

2461.14

2742.39

2911.11

3118.76

Gross Profit

1508.23

1731.47

1939.02

2055.98

2229.06

Selling & general administrative expenses

518.58

586.97

655.40

695.39

748.69

Depreciation of PPE

116.40

166.40

216.40

266.40

316.40

60

60

60

60

60

EBIT

813.26

918.11

1007.22

1034.19

1103.96

Interest payable

357.27

343.25

321.22

300.32

Profit before tax

455.99

574.86

686.00

733.87

Provision for tax

168.72

212.70

253.82

271.53

Profit After Tax

287.27

362.16

432.18

462.34

Amortization of organization costs

2|Page

Calaveras Vineyards
Chiranjib Das (PGP28089)

2) Calculate WACC for Calaveras Vineyards.

Solution:
In calculation of cost of capital, we want to calculate the cost of raising money
i.e. the minimum expected rate of return expected by outsiders.
It is the weighted average of all forms of money company want to rise.
In calculation of beta we need to keep that in mind that the company is trying
the target premium and super-premium segment.
Cost of capital will take into consideration all the three segments in which
company operates in.
Discount rate will mainly depend on premium and super premium segment.
Finn & Sawyer

Canandaigua

Frogg's Jump Weighted Average

Unlevered Beta

1.312

0.54

0.867

Proportion

0.64

0.19

0.17

1.1

D/E

0.48

0.277

0.136

0.16

Tax Rate
Levered Beta

37%
1.44

0.59

0.95

1.21

Eq Risk Premium

5.50%

Risk Free Rate

5.85%

Cost of equity

13.77%

9.12%

11.10%

12.49%

Cost of Debt

9.50%

9.50%

9.50%

9.50%

After Tax Kd

5.99%

5.99%

5.99%

5.99%

WACC

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