Please value the company with a dcf analysis, Other Management

LogicSoft Inc., a start-up that provides enterprise logistic software to transportation companies, is in negotiations with a new customer for a sales contract.  The software is highly customized and thus requires consultants to implement the software.  Developed 2 years ago, the base software was created by a core team of 10 programming engineers at a cost of $1.5 million. LogicSoft's workforce is currently 100% utilized and thus would be required to hire an additional 15 programmers in order to perform the implementation.  The full cost of each worker is expected to be $75,000, and the company expects them to work on other projects after the 2-year implementation effort.  In addition to the cost of the software and implementation, LogicSoft would also provide upgrades, updates, and maintenance for the 3 years following the successful implementation, which would cost LogicSoft $50,000 per year.   The potential customer has made a final offer with the following structure:

  • $2,200,000 for the software including implementation (50% paid up-front, 50% paid upon completion of the implementation)
  • $100,000 for the 3 years of upgrades and maintenance, payable at the end of the 3rd year, $300,000 in total.

LogicSoft also requires customers to keep the pricing of the arrangement confidential. Therefore this contract would not have any impact on the pricing of future sales.  LogicSoft's cost of capital is 15%.  The company is barely profitably, therefore is not generating any material taxable income, or losses to be carried forward.

  1. Please value the company with a DCF analysis. Should LogicSoft accept the contract?
  2. If the entire $2.2 million fee is paid at the end of the implementation, should LogicSoft accept then?

 

Posted Date: 3/11/2013 4:02:40 AM | Location : United States







Related Discussions:- Please value the company with a dcf analysis, Assignment Help, Ask Question on Please value the company with a dcf analysis, Get Answer, Expert's Help, Please value the company with a dcf analysis Discussions

Write discussion on Please value the company with a dcf analysis
Your posts are moderated
Related Questions
QUESTION 1 (a) State 5 criteria which should be taken into consideration when planning a safe place of work. (b) Briefly describe them. QUESTION 2 (a) Define a safe

Cost: DDS should be cost-effective. In devising a cost-effective service, all types of costs, viz, direct as well as indirect costs should be taken into consideration. Direct

Question 1: (a) Define and explain the term management. (b) What are the roles of managers in an organisation? (c) Rather than managers, organisations require leaders. D

Local Book Suppliers:  Every library has to depend on local booksellers for most of the supplies. Unlike the major outside book markets referred to earlier, local book shops d

S ocial structures as a management tool An understanding of the type of social structure which can take the responsibility of nurturing the learning, developing the competenci

PHYSICAL FORM OF LIBRARY CATALOGUES: Over a period of time, library experts have tried to develop different physical forms of library catalogue, such as, bound register form,

Question 1 How is the public relations industry organized? Question 2 How are newspapers registered? Explain in detail Question 3 Write a long note on the Structure of E

Ordinal Numbers: These are used not for the purpose of counting but ordering and mechanising the arrangement of things. For example, participants in a conference can be liste

Finishing: Finishing is the final process of making the binding more artistic and attractive. This includes: preparation of the leather covering  imaginative design f

Question 1: Using as example an event or conference and venue of your choice, explain how you would staff this event at this particular venue. Your answer should justify your c