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

Questions and answers while going for a negotiation, Let us review some que...

Let us review some questions that as a negotiator you can face while conducting a negotiation and the considerations to find answers to these questions:  Framing the opening

Globe, Globe: The difference between a map and a globe is one of form...

Globe: The difference between a map and a globe is one of form. A map is any geographic image of the earth drawn to scale on a flat surface whereas a globe is a spherical rep

Factors in designing a project structure, Factors in designing  a project ...

Factors in designing  a project structure The project's success is defined by a properly designed organisation chart. An organisation chart shows where each person is positione

Meaning of classification - library classification, Meaning of Classificati...

Meaning of Classification: Systematic grouping of entities (both abstract and concrete) to meet one's requirement is known as classification. Classification lies at the root o

Card services - library management, Card Services   Eminent librarians ...

Card Services   Eminent librarians like Charles Jewett, Albert Blor, Henry Stevens, F. Max Mueller, W.C.Lane, Melvil Dewey and several others advocated centralised cataloguing

Quality planning, Q uality planning Quality planning helps to schedule...

Q uality planning Quality planning helps to schedule all the tasks required to ensure that the project meets the customer needs. Quality plan is necessary to give the customer

Human resources development , HUMAN RESOURCES DEVELOPMENT This Unit d...

HUMAN RESOURCES DEVELOPMENT This Unit deals with Human Resources Development as a positive method to upgrade the employees abilities and capabilities enabling them to work to

Library catalogue code - library management , Library catalogue code: ...

Library catalogue code: A library catalogue code, one or two of which (for, there are a score of the them), as you may have surely become familiar with to some extent, can be

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