VoyForums
[ Show ]
Support VoyForums
[ Shrink ]
VoyForums Announcement: Programming and providing support for this service has been a labor of love since 1997. We are one of the few services online who values our users' privacy, and have never sold your information. We have even fought hard to defend your privacy in legal cases; however, we've done it with almost no financial support -- paying out of pocket to continue providing the service. Due to the issues imposed on us by advertisers, we also stopped hosting most ads on the forums many years ago. We hope you appreciate our efforts.

Show your support by donating any amount. (Note: We are still technically a for-profit company, so your contribution is not tax-deductible.) PayPal Acct: Feedback:

Donate to VoyForums (PayPal):

[ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: [1], 2 ]

[ Next Thread | Previous Thread | Next Message | Previous Message ]

Date Posted: 19:40:26 08/05/06 Sat
Author: tawfik
Subject: Re: Quiz 4 with solutions
In reply to: dwayne 's message, "Re: Quiz 4 with solutions" on 16:08:51 06/04/05 Sat

If anyone has the solution, it will be appreciated.

>I getting ready for my CMA exam and I have a problem
>with this case... See below
>
>Case Problem 3 HART VENTURE CAPITAL
>
>Hart Venture Capital (HVC) specializes in providing
>venture capital for software development and Internet
>applications. Currently HVC has two investment
>opportunities: (1) Security Systems, a firm that needs
>additional capital to develop an Internet security
>software package; and (2) Market Analysis, a market
>research company that needs additional capital to
>develop a software package for conducting customer
>satisfaction surveys. In exchange for Security Systems
>stock, the firm asks HVC to provide $600,000 in year
>1, $600,000 in year 2, and $250,000 in year 3 over the
>coming three-year period. In exchange for their stock,
>Market analysis asked HVC to provide $500,000 in year
>1, $350,000 in year 2, and $400,000 in year 3 over the
>same three-year period. HVC believes that both
>investment opportunities are worth pursuing. However,
>because of other investments, they are willing to
>commit at most $800,000 for both projects in the first
>year, at most $700,000 in the second year, and
>$500,000 in the third year.
>
>HVC’s financial analysis team reviewed both projects
>and recommended that the company’s objective should be
>to maximize the net present value of the total
>investment in Security Systems and Market Analysis.
>The net present value takes into account the estimated
>value of the stock at the end of the three-year period
>as well as the capital outflows that are necessary
>during each of the three years. Using an 8% rate of
>return, HVC’s financial analysis team estimates that
>100% funding of the Security Systems project has a net
>present value of $1,800,000 and 100% funding of the
>Market Analysis project has a net present value of
>$1,600,000.
>
>HVC has the option to fund any percentage of the
>Security Systems and Market Analysis projects. For
>example, if HVC decides to fund 40% of the Security
>Systems project, investments of 0.40($600,000) =
>$240,000 would be required in year 1, 0.40($600,000) =
>$240,000 would be required in year 2, and
>0.40($250,000) = $100,000 would be required in year 3.
>In this case, the net present value of the Security
>Systems project would be 0.40($1,800,000) = $720,000.
>The investment amounts and the net present value for
>partial funding of the Market Analysis project would
>be computed in the same manner.
>
>Managerial Report
>Perform an analysis of HVC’s investment problem and
>prepare a report that presents your findings and
>recommendations. Be sure to include information on the
>following:
>
>1. The recommended percentage of each project that HVC
>should fund and the net present value of the total
>investment.
>2. A capital allocation plan for Security Systems and
>Market Analysis for the coming three-year period and
>the total HVC investment each year.
>3. The effect, if any, on the recommended percentage
>of each project that HVC should fund if HVC is willing
>to commit an additional $100,000 during the first year.
>4. A capital allocation plan if an additional $100,000
>is made available.
>5. Your recommendation as to whether HVC should commit
>the additional $100,000 in the first year.
>
>Provide model details and relevant computer output in
>a report appendix.

[ Next Thread | Previous Thread | Next Message | Previous Message ]

Replies:

  • Re: Quiz 4 with solutions -- Ashley, 08:27:00 10/03/08 Fri
  • Re: Quiz 4 with solutions -- Peter (help), 09:29:32 04/28/09 Tue
  • Re: Quiz 4 with solutions -- sahal, 07:15:34 06/18/09 Thu
    [ Contact Forum Admin ]

    Forum timezone: GMT-8
    VF Version: 3.00b, ConfDB:
    Before posting please read our privacy policy.
    VoyForums(tm) is a Free Service from Voyager Info-Systems.
    Copyright © 1998-2019 Voyager Info-Systems. All Rights Reserved.