Context: This case concerns Star River and how the company finds itself in the midst of a financial crisis induced by rapid growth. The CEO basically wants to improve the financial health of the company and ask for help in making some decisions. The CEO asks for help from one of the analysts to review the historical performance of the company, forecast the financing needs for the next two years, exercise the forecasting model to identify the key drivers of the assumptions, estimate the weighted average cost of capital of Star River and finally analyze the investment proposal in a packaging machine. The two main issues here are project analysis and financial forecasting. The project should be analyzed before making the forecast, because any recommendation on the project will affect the financial forecast for the next two years. Proposed Analysis: First of all, an analysis of the minimum investment rate of the packaging machine is needed. I will use a comparable business metrics approach to calculate the company's hurdle rate (WACC) using the information provided in Exhibit 5. The cost of debt should be calculated using the bond information provided in Note 2 of the Exhibit 2 case The cost of equity capital should be calculated using the Capital Asset Pricing Model. After calculating the WACC, my second analysis would be the investment in packaging machinery. I will use incremental analysis and calculate the NPV of the incremental cash flows of both strategies (wait or invest now). After calculating the NPV of both scenarios, I will calculate the difference between the two. To review the historical health of the company, I will calculate different ratios and gross margins and try to see the trend. I will use Gordon's growth model to find out the company's sustainable growth rate using historical data and then compare it to its actual growth rate. Finally, I will make a financial forecast to understand the ability of companies to repay their loans. I will use a simple sales percentage forecasting technique. I will use existing trends in my forecasts to show the implications of current policies before making my recommendations. During my forecast I will use the New Era Partners loan to find out interest rates. I will take short-term debt as the thorn. To find out what some of the key drivers of the analysis are, I will further perform several sensitivity analyses. I think some of the key drivers of our assumptions could be sales growth, manufacturing costs as a percentage of sales, inventories as a percentage of cost of goods sold, etc...