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

Nature of terms - library management, Nature of Terms: In an analysis ...

Nature of Terms: In an analysis of classification terminology, Prasad (1986) had identified three types of terms - normative, fundamental and associative. Normative terms are

Cataloguing-in-publication, Cataloguing-in-Publication (CIP): Centrali...

Cataloguing-in-Publication (CIP): Centralised cataloguing led to the logical step of publishing bibliographic entries of documents in the publication itself, on the reverse si

Merits of dictionary catalogue, Merits of Dictionary Catalogue: a)  It...

Merits of Dictionary Catalogue: a)  Its alphabetical arrangement is easy and simple to use. Anyone knowing the letters of an alphabet and being able to refer a dictionary can

Nominal group technique, Nominal Group T echnique It is a metho...

Nominal Group T echnique It is a method of group decision-making in which individual members meet face to face, first, to generate  ideas individually, and then to poll

Categories of information in social sciences, Categories of Information in ...

Categories of Information in Social Sciences  It would be useful, particularly in social sciences, to group information into three categories:  •  Statistical Information

Discuss the major joints of thorax and pelvis, Question 1 Describe the ...

Question 1 Describe the external features of the heart. Add a note on circulation of blood within the heart 2 Discuss the major joints of thorax and pelvis 3 Explain the

Concept and need for information, CONCEPT AND NEED FOR  INFORMATION: ...

CONCEPT AND NEED FOR  INFORMATION: Information emanates from all human activities and achievements; both individuals and corporate bodies are involved in the creation of infor

Environment and natural resource management, discuss merits and demerits of...

discuss merits and demerits of common property regimes and open access property regimes

Location site -preliminary considerations -library building, Location Site ...

Location Site -Preliminary Considerations of Library building-library managment Location is  important for homogeneous  services, site  selection and choice of community,  reg

Economic theories of wages, Question 1: What are the major issues relat...

Question 1: What are the major issues related to repatriation? Describe Repatriation Major isssues related to repariation   Question 2: Prepare a short

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