Week 3 540 Essay Example | Topics and Well Written Essays - 750 words

Week 3 540 - Essay Example Enter the Wireless Communication market,† (Simulation). An analysis done on the prospects of these two proposals, reveals that the agenda or proposal to expand the existing Digital Imaging or Dig-Image market share, can be beneficial than the option of entering the Wireless Communication or W-Comm. But, at the same time, this decision to go for Dig-Image has certain internal as well as external risk. So, this paper will analyze the risks of this investment decisions and importantly the mitigation of those risks. Normally, organizations wanting to increase its value, as to invest in projects that provides a positive Net Present Value. The Net Present Value of an investment project is usually determined by the subtraction of the projects total cost from the present value of the projects expected future cash flows. And, if the Net Present Value is higher than the projects cost, then it is expected that the project will increase the firms value According to the outline provided by the Marketing Research Reports, SAI should use the best capital budgeting approach in the form of NPV, as it will identify cash flows rather than profits. Then, it utilizes all the cash flows and in turn discounts the cash flows properly. So, in the case of Dig-Image, the sales of it in new markets depend upon its existing market share from the global perspective, price per product and importantly the size of market. As SAI through its Dig-image proposal tries to expand its market share throughout the world, it should be aware of the risks associated with foreign exchange exposure and the relevant mitigation strategy of hedging. Foreign exposure in the sense, the frequent fluctuations in the exchange rates will negatively affect the operating cash flows and importantly the dollar value of the SAI’s total assets and liabilities. This risk will have both short term as well as long term effect and could dent any new initiatives from SAI. This