Risk Analysis on Investment Decision

Risk Analysis on Investment DecisionSilicon Arts Inc. (SAI) is a four- form-old troupe that manufactures digital imaging Integrated Circuits (ICs) that are used in digital cameras, DVD players, computers, and medical and scientific instrumentation. It has presence in North America (70% sales), Europe (20% sales) and South East Asia (10% sales). SAI?s annual sales turnover is $180 million. With the semiconductor flourish of 2000, SAI grew by 78%. However, the keep company experienced a 40% reduction in revenue with an persistence slowdown the next year. SAI reduced its costs and froze jacket crown expenses in response to the reduced revenue. SAI positioned itself to respond to an industry upturn by continuing their research and discipline efforts and developed the IC 1032 specialty chip. With this strategic move and the industry gain in momentum, SAI has experienced recent revenue growth. With this growth, SAI?s is able to pursue the company?s two-point agenda for the company: Increase market share and keep pace with technology.

This dead body of work will examine two potential neat investment proposals, Dig-image and W-comm, prepared by a task index championed by the SAI chairman, Hal Eichner.



In the course of this examination, a comparison of web Present Value (NPV), Internal Rate of Return (IRR) and favorableness Index (PI) between the two mutually exclusive capital investment proposals will be performed. To begin a apprize overview of each proposal will be given.

Dig-imageSAI is considering the construction of a new Sunnyvale, CA plant to increase its production instal of the digital Imaging semiconductor. This comes on the heels of a recent worldwide study that has shown a market growth of 20% in year 1 and an annual growth of 7% from year 2 onward, with a cap in year 5 as new technologies are anticipated to replace the Digital Imaging semiconductor. The capital...

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