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  • Flash Memory, Inc. - Group 8

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    Bryan Meza
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    The CFO of Flash Memory, Inc. needs to plan financing for existing and new product lines approved by the board. There is an opportunity to develop a new product line. Three alternatives were evaluated: taking out a bank loan, investing in the new product, or investing and issuing 300,000 new shares. Based on projected return on equity over 2010-2012, investing directly in the new product (Option 2) was determined to provide the best returns for the company in future years compared to the other two options.

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    The CFO of Flash Memory, Inc. needs to plan financing for existing and new product lines approved by the board. There is an opportunity to develop a new product line. Three alternatives were evaluated: taking out a bank loan, investing in the new product, or investing and issuing 300,000 new shares. Based on projected return on equity over 2010-2012, investing directly in the new product (Option 2) was determined to provide the best returns for the company in future years compared to the other two options.

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    © All Rights Reserved
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    2K Ansichten1 Seite

    Flash Memory, Inc. - Group 8

    Hochgeladen von

    Bryan Meza
    The CFO of Flash Memory, Inc. needs to plan financing for existing and new product lines approved by the board. There is an opportunity to develop a new product line. Three alternatives were evaluated: taking out a bank loan, investing in the new product, or investing and issuing 300,000 new shares. Based on projected return on equity over 2010-2012, investing directly in the new product (Option 2) was determined to provide the best returns for the company in future years compared to the other two options.

    Copyright:

    © All Rights Reserved
    Als DOCX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 1

    New Heritage Doll Company

    Financial Management
    Group 8

    Hathaway Browne is the CFO of Flash Memory, Inc., and needs to plan to finance both existing
    product lines and all other new investments approved by the board.
    An investment opportunity to develop a new product line came up recently.
    There were evaluated three alternatives

    Option 1 - Loan Bank


    Option 2 - Invest in New Product
    Option 3 - Invest in New Product sailing 300,000 shares

    The spreadsheet shows the calculation of each one:


    Return on equity
    Option 1 - Loan Bank
    Option 2 - Invest in New Product
    Option 3 - Invest in New Product sailing 300,000 shares

    2010
    14.7%
    14.7%
    11.7%

    2011
    14.7%
    18.7%
    16.2%

    2012
    12.4%
    16.5%
    14.8%

    After evaluate the three alternatives the best one is to invest in new product (Option 2) since it
    will provide the best ROE in the following years for the company.

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