Final answer:
To assess the Hola Kola case's investment, one must calculate the NPV, IRR, Payback Period, and PI, considering an opportunity cost of 15%. These calculations will help determine the profitability and risk associated with the investment. The price per share, drawn from PDV, is calculated to be $256,500.
Step-by-step explanation:
When evaluating the Hola Kola case, we use several financial metrics to assess the attractiveness of an investment, considering the opportunity cost of capital at 15%. Firstly, to compute the Net Present Value (NPV), we discount future profits at the opportunity cost to find their present value, and then we subtract the initial investment. If this value is positive, it indicates that the project exceeds the opportunity cost.
The Internal Rate of Return (IRR) is the discount rate at which the NPV of an investment becomes zero. It's found by iterating various discount rates until the NPV equals zero. An IRR that surpasses the opportunity cost implies that the investment is worthwhile.
The Payback Period is the time it takes for the investment to pay for itself from cash inflows. It's the point where cumulative cash flows equal the initial investment. The shorter the payback period, the less risk there is.
The Profitability Index (PI) is found by dividing the present value of future cash flows by the initial investment. A PI greater than 1 indicates that the investment is expected to generate value beyond the amount invested.
To calculate the price per share based on PDV, we would divide the total PDV of profits, in this case 51.3 million, by the number of shares, 200, which equals $256,500 per share.