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Essay / Research Paper Abstract
This 4 page paper answers two questions set by the student, the first assesses a firms likely future performance the second considers if a company is suitable to be taken public. The bibliography cites 1 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEfinquest1.rtf
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Unformatted sample text from the term paper:
gain a first mover advantage, which is managed to take advantage of. The company is not at a point where they need to make some decisions. If we look
at the companies potential over the next 3 0 5 years there are many variable. The current product has reached the declining stage of its life lifecycle. The competitive advantages
it once had have been emulated and improved upon by other companies who now have the advantages. The company will see continuing downward spiral if nothing is done. There are
two options, the first is to sell of the division to another company. However with the current trends this is not likely to gain a good price. The alternative is
the investment of a further $18 million and then increasing sales as a result of renewing the product so that is has the advantages of the other products on the
market. To look at the way this may work out we can consider the evidence of the cash flows and assume that the 18 million investment written off over the
five years is written off on a straight line basis. 2005 2006 2007 2008 2009 2010 Units sold 150,000 189,000 246,000 264,000 264,000 264,000 Price per unit 495
495 495 495 495 495 Revenue 74,250,000 93,555,000 121,770,000 130,680,000 130,680,000 130,680,000 Cost of goods 40,095,000 50,519,700 65,755,800 70,567,200 70,567,200 70,567,200 Operating Expenses 19,305,000 24,324,300 31,660,200 33,976,800 33,976,800 33,976,800 Profit
14,850,000 18,711,000 24,354,000 26,136,000 26,136,000 26,136,000 Less depreciation 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000 0 Net profit 11,250,000 15,111,000 20,754,000 22,536,000 22,536,000 26,136,000 This indicates that there is a good
future and a NPV calculation. For the project to continue we are told there needs to be a return of at least 14.5% so we can perform an NPV calculation.
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