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

Printed book form - library catalogues, Printed Book Form: The printe...

Printed Book Form: The printed book form of library catalogue is one of its typical forms. These types of library catalogues are prepared conforming to all the standard princi

Loose assemblage, Loose assemblage is assembling together of two or more of...

Loose assemblage is assembling together of two or more of: subjects (basic or compound) isolate ideas (in one and the same facet, or isolate ideas in one and the same array)

Field sources - source of data, Field Sources: Include living persons ...

Field Sources: Include living persons who have the knowledge about or have been  in  intimate contact with  social conditions and changes over a considerable time. These Peopl

Documentation and information centres and databases , DOCUMENTATION AND INF...

DOCUMENTATION AND INFORMATION CENTRES AND DATABASES:   Traditionally, libraries have been collecting various kinds of publications and holding them in readiness for use by scho

Explain project reviews and risk reassessment briefly, Question 1 Explain ...

Question 1 Explain the various inputs , tools and techniques of qualitative risk analysis process Question 2 The risk mitigation methodology describes the approach to contro

List 5 factors affecting productivity, QUESTION a) List 5 factors affec...

QUESTION a) List 5 factors affecting productivity b) List 3 factors affecting productivity which are controllable at company's or project level and 2 factors affecting produ

The principles of job design, QUESTION 1 Business policy aims to meet t...

QUESTION 1 Business policy aims to meet the organisation objectives by maintaining or increasing market share and diversifying or with meeting any financial, political or statu

Important security measures in e-banking, a) Explain why the following se...

a) Explain why the following security measures are important in e-banking: (i) Data confidentiality (ii) Data Integrity (iii) Access control (iv) Auditing b)

Aacr 2- l c descriptive rules, AACR 2: Anglo-American cataloging rules...

AACR 2: Anglo-American cataloging rules/ Prepared by the American Library Association, the British Library, the Canadian Committee on Cataloguing, the Library Association, the

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