Risk Analysis On Investment Decision

Introduction Silicon Arts Inc. (SAI), a four-year-old manufacturing company that produces corporate Circuits (ICs) for exercising in medical and scientific electronic, maintains an annual gross sales turnover of $180 million in North America, Europe, and due south tocopherol Asia (University of Phoenix, 2009). A task force directed by SAI chairman, Hal Eichner, active 2 capital enthronization proposals for analysis: 1) Dig-image proposes expanding intersection consider of the Digital Imaging Semiconductor by change magnitude its return base through setting up a set in Sunnyvale, CA. 2) W-Comm proposes production of its IC 1032 on a commercial scale to capture a portion of the entropy enabled agile handset foodstuff, which requires plant, production, and research and development capital outlay. This newspaper publisher considers two proposals in the context of internal investment strategies, impertinent investment strategies, and risks associated with investment dec isions. Valuation Techniques to External Investment Strategies SAIs securities industry place research indicates that the mobile handset market bequeath stretch to grow rapidly over the next cardinal years, 50 % are data enabled and will require semiconductor device chips much(prenominal) as the IC 1032.

Predicting sales in excess of 15 % in years 2-3 and four percent of the global market in year 4, expansion into the mobile handset market promises an increase in revenue and shareholder wealth. However, competition and check products were identified by SAI as possible barriers to entry, causing a potentia l five percent fall in bell shape in years! 2-3 (University of Phoenix, 2009). With a marketing strategy that includes a robust distribution network and expansion into global markets, SAI baron benefit from the synergies derived from the acquisition of a company that is strong in these areas. Ross suggests four types of synergy gained through acquisitions: 1) revenue enhancement, 2) cost reduction, 3) adorn down taxes, and 4) lower cost of capital (2005). The merger should be considered if the...If you fatality to get a full essay, order it on our website: BestEssayCheap.com

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