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Evaluation of Business Opportunity using the Net Asset Value

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I'm a graduate student in a media management program. The attached case study is giving me some fits. We will be doing a similar case soon, so if I can see this one and understand the answers - I hopefully can do the next one myself.

We have no TA's, and our professor, while a great guy, is pretty busy to deal with a crowded class. Our reading material doesn't really supports the completion of this assignment either. I've searched around for some material, but can't hit it.

This assignment is broken into three pieces: questions 1-3, questions 4 & 5, and questions 6-8.

Let's start with 1-3. I've provided the case study, and the beginnings of my write-up.

I would like feedback on my first three answers. Any guidance beyond that would be appreciated, but maybe we can do that in the next session depending on how this one works-out.

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Analysis

1 What is Charlie's current wealth today?

Charlie's current wealth today is $4,820,000, but only since we know with certainty that the next installment of his inheritance is coming. His current wealth combines the $2-million he holds in his hands now, with the present value of the $3-million ($2.82 mil.) that's coming in a year, assuming the trustees have locked-in a 6% return the money.

While the concept of Charlie's total wealth is well-taken in the context of this lesson, and while there's no doubt he could probably leverage his stated net worth, the Protestant in me still has a hard time saying ...

Solution Summary

The solution discusses the evaluation of business opportunity using the net asset value calculations.

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