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

What are the basic components of inventory, Question: (a) What are the ...

Question: (a) What are the basic components of inventory? (b) Name the steps for finding the optimum inventory. (c) What are the assumptions for the Economic Order Quanti

Attaching covers and endpapers - binding processes, Attaching Covers: ...

Attaching Covers: Regardless of the sewing method used, the sewn book must be "knocked up"  to be square at head and spine. By hammering along the back edges, the expansion re

Areas of responsibility - library management, Areas of Responsibility - lib...

Areas of Responsibility - library management: The main areas of responsibility of the maintenance section or division are: Taking responsibilities regarding a) the  method

Agency method - periodicals procurement, Agency Method: The alternativ...

Agency Method: The alternative to direct ordering with publishers is to acquire the periodicals through a duly appointed subscription agent. A subscription agent is a person o

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

Need for technical processing - library management, Need for Technical Proc...

Need for Technical Processing: The need for technical processing has been  brought about by a number of reasons/factors. They are:  1) Accelerated  growth of information  r

Describe the guidelines of change management, Question 1 Define strategic ...

Question 1 Define strategic quality management. Describe the elements of strategic quality management Question 2 Explain the types, advantages and drawbacks of qualitative re

What are the major characteristics of adult learners, QUESTION 1 Motiva...

QUESTION 1 Motivation is a vital condition of learning. Discuss the statement and suggest ways and means by which school learning can be effectively motivated QUESTION 2

Information and other related concepts, INFORMATION AND OTHER RELATED CONCE...

INFORMATION AND OTHER RELATED CONCEPTS: You may often hear or read in newspapers and other popular magazines about "exponential growth of information" or "explosion of informa

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