You work for a firm that is trying to decide whether they, Ask an Expert

Management Studies

You work for a firm that is trying to decide whether they want to expand their operations by buyi...

You work for a firm that is trying to decide whether they want to expand their operations by buying another company that caters to a different industry. The company thinks that with the resulting synergies between the two firms, there will be enough cost savings and economies of scale to make the new venture extremely profitable. The company’s current revenue stream is $50MM with negligible costs. For the purposes of this exercise only, let us assume that the costs are zero. If they bought the company, it would initially cost them $4MM with annual ongoing costs of $1MM.

The president of the firm asked you to conduct an analysis. The time period that you are looking at is one year with six month increments. The current risk-free rate is 4.00%. Your current research has shown that the standard deviation of the revenues is 55%. Does it makes sense for your firm to buy the company?

View complete question

Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92557200

Have any Question?Write your Review or question?

Related Questions in Operation Management

Factual situation number one jon revolta a minor had hopes

FACTUAL SITUATION NUMBER ONE: Jon Revolta, a minor, had hopes of becoming a great "disco" king, so he went to a jewelry store and purchased a gold medallion necklace for $2,000. After a week of constant responses at the ...

In the highly turbulent airline industry southwest airlines

In the highly turbulent airline industry, Southwest Airlines is one of the healthiest companies, continuing growth and profit in a climate that is threatening the survival of other airlines. Much of its success is attrib ...

Is adaptive leadership principally suited for turbulent

Is adaptive leadership principally suited for turbulent environment, as opposed to stable environments? (For example—Johan Vaaler, a Norwegian, invented the paperclip in 1899. The paperclip industry has remained pretty m ...

Use a personal example or a text example or a business

Use a personal example or a text example or a business problem from the real world to illustrate one or more of the Decision Analysis models covered. Why was the particular model chosen? Which model(s) might provide a be ...

1 please explain the downsides of not attaching the packing

1. Please explain the downsides of not attaching the packing list to the outside of the shoe master cartons in the packing with an example. What are the effects on warehouse shipping dock and on the retail end? 2. Foreca ...

Assignmentebay is one of the biggest online auctioning

Assignment eBay is one of the biggest online auctioning companies in the world. Buyers and sellers of all types are able to hop online, put up something for sale, and sell it! Basically, the way it works is that you find ...

1 explain the traditional and technology-based training

1. Explain the traditional and technology-based training methods available for employees (exhibit 11-9). In your opinion which method(s) offers the best value in terms of accessibility, cost and ability to deliver inform ...

Examine your results from the ldquoleadership archetype

Examine your results from the “Leadership Archetype Questionnaire.” What gaps or misalignments, if any, exist between the results of your assessment and how you perceive yourself in leadership constructs? Explain. What s ...

Assignmentoutsourcing may provide tremendous advantages for

Assignment Outsourcing may provide tremendous advantages for firms. It may allow companies to specialize, reduce costs, and focus narrowly on the core competencies they deem strategic; however, companies also have to thi ...

For full credit on this discussion each question asked must

For full credit on this discussion, each question asked must receive a paragraph worth of analysis. A paragraph is defined as follows. It will contain at least four sentences. The first sentence introduces the claim or s ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Operation Management Expert