Assignment:
Rawhide Brewery
There are three different proposals contained in the case study: two proposals made by Andrew Upson, and one counter-proposal made by Bruce McAlpline. For your assignment, you are to evaluate these.
First, describe the basics of the proposals. Would any of them significantly reduce Rawhide's debt-to-equity ratio? If so, how would they accomplish that. If not, explain why not. Based on an accounting valuation, which proposal is the best for Rawhide?
Second, develop a decision model for the decision. Assign a probability of acceptance to each of the three proposals and calculate an expected value for each decision. If you have to make some assumptions, be sure that you state them. Based on the expected values, which decision is the best for Rawhide?
Finally, discuss the differences between your answers above. What is the optimal decision for Rawhide and why?