Developing new iphone application

Assignment Help Financial Management

Reference no: EM131825299

Take Five Systems, a new start-up, is developing a new iPhone application (“app”) and provides you with the following assumptions: a. Development and testing of the new app will take four months. Month five is the first month of revenue generation. b. Initial monthly app sales of 5,000 downloads at a price of $2.99 c. Unit sales will grow at 15% per month for months six through twelve and then will be flat thereafter d. The app will become obsolete and will need to be revised/replaced after month 18 Use the data provided to forecast Take Five’s monthly revenue for Months 1-18

2 Take Five Systems is concerned about the accuracy of their revenue estimates in Question 2. Specifically, they wish to use sensitivity analysis to evaluate the impact on Month 18 revenue of the following: a. Variations in 2% increments between 9-21% in the growth rate of unit sales in Months 5-12 (that is, 9%, 11%,…, 19%, 21%) b. Variation in 500 unit increments between 2,500 and 7,500 in the level of initial sales (that is, 2,500, 3,000,…, 7,000, 7,500)

Reference no: EM131825299

Questions Cloud

Moving average smoothing methods produce the best forecasts : With which type of time series data should moving average smoothing methods produce the best forecasts

Current market values of dietrich equity and debt : What are the current market values of Dietrich's equity and debt? What are the current market values of Steinberg's equity and debt?

Variety of summer recreation alternatives : Millbridge Township provides a variety of summer recreation alternatives. How many passes would be sold for the pool at that break-even volume?

Which means hiring new people and delegating tasks : She is now considering expanding the business, which means hiring new people and delegating tasks.

Developing new iphone application : Take Five Systems, a new start-up, is developing a new iPhone application (“app”) and provides you with the following assumptions:

What is the equity value and the debt-to-value ratio : What is the equity value and the debt-to-value ratio if the company's growth rate is 5 percent?

What is the future value of five year ordinary annuity : What is the future value of a 5-year ordinary annuity with annual payments of $100, evaluated at a 5 percent interest rate?

Expenses contribute to their total itemized deductions : How much would the Sanborns' medical expenses contribute to their total itemized deductions?

What was the company debt and assets ratio : If Taylor's year-end debt (liabilities) was $60 million, what was the company's debt/assets ratio?

User Account

All Pages