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

Reasons for a negotiation , Reasons for a negotiation  As we now aware ...

Reasons for a negotiation  As we now aware that negotiation is a process, we will now learn the reasons for which the negotiation plays a crucial role.   Detailed negotiatio

Examples of good service and examples of bad service, Problem 1 Many su...

Problem 1 Many surveys have been carried out over recent years to try to evaluate why customers are lost. While the answers may vary by customer and organisation, survey after

Proposal or renewal sub system, Proposal or Renewal Sub System: Type  ...

Proposal or Renewal Sub System: Type                                         Web-based Application Role                                          Software Engineer Team s

Investment management, You are a manager in the investment industry, whose ...

You are a manager in the investment industry, whose role is to provide investment portfolio advice and managementto a client, who is your investorprincipal. You should identify t

Role of regulator and players, Question 1 Consider yourself as a chief fin...

Question 1 Consider yourself as a chief financial officer, describe the treasury functions that you handle and discuss how you will formulate the treasury policy Question 2 T

Explain the concept of classical utilitarianism, QUESTION 1 (a) Define ...

QUESTION 1 (a) Define (i) Conflict of Interest and (ii) integrity? (b) What would you recommend for an organization that go beyond obeying the law? (c) How far do you thi

What are the main features of corporate bonds, Question 1 What are securit...

Question 1 What are securities? Describe the features of various types of securities Question 2 What are the main features of corporate bonds? Question 3 Define risk. Wh

Corporate social responsibility (CSR), ETHICS AND SOCIAL RESPONSIBILITY AT ...

ETHICS AND SOCIAL RESPONSIBILITY AT … Select a company of interest to you (Fortune 500, Not-For-Profit, etc.) Examples of corporations that could be used are: • Tommy Hilfiger at

Modes of formation of subjects, In order to give unique co-extensive repres...

In order to give unique co-extensive representation to each subject in the UoS, the classificationist has to ascertain the various attributes - infinite, turbulently dynamic, conti

Human resource development-need and purpose, Need and Purpose The per...

Need and Purpose The personnel of an organisation play the most vital role by converting all the other  resources into tangible products and services.. Therefore attention to

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