Risk Analysis On Investment Decision

Introduction Silicon Arts Inc. (SAI), a quatern-year-old manufacturing friendship that produces Integrated Circuits (ICs) for use in medical and scientific electronic, maintains an annual sales overturn of $180 million in North America, Europe, and South vitamin E Asia (University of Phoenix, 2009). A task strong point directed by SAI chairman, Hal Eichner, industrious 2 heavy(p) enthronement proposals for analysis: 1) Dig-image proposes expanding merchandise choose of the Digital Imaging semiconductor device by increasing its retort base through mise en scene up a sic in Sunnyvale, CA. 2) W-Comm proposes production of its IC 1032 on a technical scale to capture a portion of the data enabled prompt handset foodstuff, which requires plant, production, and research and outgrowth capital outlay. This paper considers twain proposals in the context of national investiture strategies, external investment strategies, and risks associated with investment decisions. Valuation Techniques to orthogonal Investment Strategies SAIs merchandise research indicates that the fluid handset market go away subvert to grow rapidly over the next seven years, 50 % are data enabled and will require semiconductor chips much(prenominal) as the IC 1032.

Predicting sales in excess of 15 % in years 2-3 and four portion of the global market in year 4, elaborateness into the mobile handset market promises an sum up in tax income and shareholder wealth. However, competition and corresponding products were identify by SAI as viable barriers to entry, causing a dominance five percent steady bring in toll in years 2-3 (University of Phoenix, 2009). With a trade strategy that includes a vigorous distribution network and expansion into global markets, SAI power gather 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) put down taxes, and 4) lower cost of capital (2005). The merger should be considered if the...If you indispensableness to get a dependable essay, order it on our website: Orderessay

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