Background:This case concerns Star River and how the company finds itself in the middle of a financial crisis brought on by rapid growth. The CEO basically wants to improve the financial health of the company and ask for help in making certain decisions. The CEO asks one of the analysts to help him review the company's historical performance, forecast financing needs for the next two years, exercise the forecasting model to identify the key drivers of the assumptions, to estimate the weighted average cost of capital of Star River and finally, analyze the investment project in a packaging machine. The two main issues in this case are project analysis and financial forecasts. The project should be analyzed before making any forecasts, as any recommendations on the project will affect the financial forecasts for the next two years. Proposed analysis: First of all, an analysis of the critical investment rate in the packaging machine is required. I will use a comparable company metrics approach to determine 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 footnote 2 of the case under Exhibit 2. The cost of equity should be calculated using the financial asset pricing model. After calculating the WACC, my second analysis would focus on the investment in the packaging machine. 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 the two scenarios, I will calculate the difference between the two. In order to examine the historical health of the company, I will calculate different ratios and gross margins and try to see the trend. I will use the Gordon 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 determine the company's ability to repay its loans. . I will use a simple technique of forecasting sales percentages. I will use existing trends in my forecasts to show the implications of current policies before making my own recommendations. When forecasting, I will use the New Era Partners loan to find interest rates. I will make short-term debt my plug-in. In order to find out what some of the main driving factors are in the analysis, I will further carry out different sensitivity analyses. I think some of the main drivers of our assumptions could be sales growth, production costs as a percentage of sales, inventory as a percentage of cost of goods sold, etc...