Riskanalysis on Investment

Riskanalysis on Investment

  • Submitted By: ch1spal1
  • Date Submitted: 10/20/2008 6:00 PM
  • Category: Business
  • Words: 1320
  • Page: 6
  • Views: 536

Risk Analysis on Investment Decisions
Enterprises are faced with making decisions on investment opportunities in order create more value for the enterprise. There are ways to make the decisions the enterprise makes less destructive to the enterprise. This paper will discuss a few of these techniques that are available to Silicon Arts Incorporated.


Risk Analysis on Investment Decisions
Silicon Arts Incorporated, a high tech firm from Southern California with annual sales of $180 million, is looking ways to improve the companies’ market share and continue to keep pace with technology (Apollo Group, Inc., 2004, Capital Budgeting Simulation). Hal Eichner, Silicon Arts Incorporated’s Chairman, and Kathy Lane, the Chief Financial Officer, have come up with two proposals that they believe can improve the companies’ sales and market position, as well as keep pace with technological changes. Given these opportunities there are some considerations concerning financing that need to be investigated and mitigated if possible.
External Investment Strategies
Silicon Arts Incorporated is facing a tough decision concerning which of two proposals, one involving expanding its base digital imaging technology and the other a new growth area of wireless communications (Apollo Group, Inc., 2004, Finance for Managerial Decision Making – Capital Budgeting). The choice that Silicon Arts Incorporated makes will have effects on the company for years to come and will determine what the companies position is concerning acquisitions.
The acquisition of one firm by another can take place in one of three “basic legal procedures” according to Ross, there is the “merger or consolidation,” the “acquisition of stock, and the acquisition of assets” (Ross, et al., 2005, 797). A merger is where one firm takes over the other, like a predator eating its pry, with the acquiring firm becoming stronger and the acquired firm becoming extinct (Ross, et al., 2005, 797). In a consolidation the firms...

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