Problem
I. Assess the current financial health and recent financial performance of Astral Records. What strengths or weaknesses would you highlight to Sarah Conner?
II. Forecast the financial statements of Astral for 1994 and 1995. What will be the external financial requirements of the firm in those years? In your opinion, can the company repay its loan within a reasonable period?
III. What is Astral's WACC? Explain the methods and assumptions you used to complete estimation of the WACC.
IV. What are the free cash flows of the packaging-machine investment? In your opinion, should Conner approve the investment?