Please value the company with a dcf analysis, Other Management

Assignment Help:

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?

 


Related Discussions:- Please value the company with a dcf analysis

Simplest transporting devices, The simplest transporting devices are wh...

The simplest transporting devices are wheel barrows and hand trucks. These are still in use in number of small industries all over the country. Figure (a) shows a ha

Define some characteristics of technology forecasting, Question 1 Describe...

Question 1 Describe the term technology. Write a short note on progression and growth of technology Question 2 Define some characteristics of technology forecasting. Describe

Six sigma - cynics view, Six Sigma - Cynics view The Six Sigma has take...

Six Sigma - Cynics view The Six Sigma has taken on the life of its own. The cynics might see it as "the next big thing" which will fade as soon as the new buzzword will come al

Describe corporate identity management, Question : (a) "A Strong corpo...

Question : (a) "A Strong corporate identity helps reinforce a company`s brand image and supports its marketing activities" i. Describe what you understand by corporate iden

Explain the arbitrage pricing theory, QUESTION (a) Explain the Arbitrag...

QUESTION (a) Explain the Arbitrage Pricing Theory. In what ways the Arbitrage Pricing Theory is considered to be a superior model. What are its main limitations? (b) Disting

Negotiation skills , Negotiation Skills  Negotiation is an interactive ...

Negotiation Skills  Negotiation is an interactive process between two or more parties seeking to find common ground on an issue or issues of mutual interest. Negotiation is als

Differences between a credit card and a debit card, Question: a) List ...

Question: a) List and describe the role of the different parties involved in any e-payment system. b) Outline five factors (characteristics) that determine the acceptance

Physical mobilisation, The areas to be considered while monitoring and cont...

The areas to be considered while monitoring and controlling a contract are wide spread. They are: P h y sical mobilisation: In this stage, the contractor gathers people, m

Approach of readers for documents - library classification, Approach of Rea...

Approach of Readers for Documents: As stated earlier, documents can be arranged in libraries on the basis of the colour of the binding, the size, the language, the year of pub

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd