Scribd Logo
Upload

Welcome to Scribd!

  • 2K views

    Flash Memory, Inc. - Group 8

    Uploaded by

    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
    Download as DOCX, PDF, TXT or read online from Scribd

    Flash Memory, Inc. - Group 8

    Uploaded by

    Bryan Meza
    2K views1 page
    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.

    Original Title

    Flash Memory, Inc. - Group 8.docx

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    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
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views1 page

    Flash Memory, Inc. - Group 8

    Uploaded by

    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
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 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.

    You might also like