Hearing Internal Rate of Return and Terminal Value Essay

Harmonic Hearing 1) For both financing alternative, develop a model that shows forecasted revenues, expenses, profits, and free cash flows generated by Harmonic in years one through seven. -Model shown in chart below. †¢ What is the terminal value of the company under each scenario? As you can see in the graph below, the terminal value for the company if it takes the equity route is about $106M, where if it takes the debt route its terminal value will be about $45M. †¢ What cash payments will be made by the company at the end of year seven? As you can see in the graph below, the only cash outflows from the company in year 7 will come from debt financing, with about an $11M outflow from buying back the building from Frank Thomas,†¦show more content†¦After year 5, they cash flow will pick up where it left off and increase even higher until they sell the company. The IRR will be around 429%. And the value created from the small investment will be just under $45 million in only a 7 year period. 5) What are the positives and negatives of each proposal? Which financing alternative would you recommend and why? Equity Proposal †¢ Advantages i. Higher IRR ii. Can immediately complete launch of new hearing aid ï‚ § Will stay ahead of competition iii. Will reduce the risk of the transaction iv. Will reduce cost of goods sold on new goods from purchasing new equipment v. Will increase depreciation expense, lowering tax expenses vi. Will have no rent, interest, or lease expenses vii. If company goes down, will not have to pay any additional money back †¢ Disadvantages i. Less ownership in company ii. Will have to invest more capital in the company than the debt proposal Debt Proposal †¢ Advantages i. Maintain 100% ownership of company ï‚ § Will not have to follow anyone else’s plans for the business and can completely control the direction the company moves in ii. More tax deductions †¢ Disadvantages i. Lower IRR ii. Will have a delay in bringing new hearing aid to the market ï‚ § Will allow competition to catch up to them faster iii. Will have to worry about having enough cash flow to pay for several different interest payments andShow MoreRelatedEssay about The Purchase of Harmonic Hearing Co.2120 Words   |  9 PagesHarmonic Hearing Co. Case Recommendation Under the two circumstances presented, I recommend that Harriet Burns and Richard Irvine should finance the purchase of Harmonic Hearing Co. through the deal proposed by the private equity firm, Comet Capital. This proposal best aligns with Burns and Irvine’s goal to select an option that offers the â€Å"best combination of cost, expected return of their ownership interest and financial flexibility.† To evaluate the two alternatives, a comparisonRead MoreProposal for the Acquisition23105 Words   |  93 Pagesstrategy. 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Should Immigration Be Legal Or Illegal - 1701 Words

The Topic of Immigration is certainly a complex and touchy subject. Moreover, that of Illegal Immigration is vehemently controversial. However, when it comes to exercising judgment on the subject and formulating a stance there are de facto only two approaches: a sentimental optimistic approach or a business like realistic approach. According to an article by Immigration specialist Charles Hirschman the general optimistic assertion is that Immigration be it legal or illegal strengthens American society and promotes diversity and liberty. An admirable sentiment that is, indeed, but as much as the realm of hippy sentiment is admirable it is also theoretical and simply unrealistic. Realistically speaking, there is no such setting in which unauthorized immigration should be acceptable by the invaded society and viewed as a strength, certainly not here in the U.S nor in any other global sovereignty. Illegal Immigration is a seductive thorn on the side of America which ought to be combatted . It falls within the realm of malicious enterprises, not unlike human trafficking or squatter crusades, which places a burden on the economy of the general population, disrupts the current ethnic coexistence, and results in an overcrowded society. First off, looking at the scope of the situation from the economic stand point of the general population, it is evident that illegal immigration puts a strain on the U.S job market. This is a concept that has been debated vehemently and has been provenShow MoreRelatedThe Immigration Of Illegal Immigrants1643 Words   |  7 Pagesfreedom which ultimately form the famous â€Å"American dream,† in which so many individuals desire. While this country’s reputation and culture was built on the basis of immigration, the ideals and viewpoints of this topic have strayed far from welcoming over the years. 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Overcoming Fear Essay Example For Students

Overcoming Fear Essay Have you ever had a fear that has haunted you for many years? In the life of Joe Thomas, this was true. Joe had a fear of heights and roller coasters. He knew that he would have to conquer this fear. Joe was just like any other kid growing up near Pittsburgh and visiting Kennywood Park for his class trip every year. One hot summer day, just south of Pittsburgh, Pennsylvania a young boy named Joe Thomas was visiting Kennywood Park with his class during the class trip. Joe had a great fear of roller coasters and heights. Joe really wanted to ride the roller coasters so that he would not be made fun of. He could not ride the roller coasters though, because he was too scared. He especially was scared of the Steel Phantom. Joe would not ride any of the roller coasters at Kennywood. Another year came and went and Joe still was afraid of riding the roller coasters and had no fun at Kennywood. He was seventeen years old now and this was his class last trip to Kennywood before he graduated. He decided that he wanted to ride the steel phantom and try to conquer his fear. He stepped into line with his friends. His friends were very excited, but Joe was scared. Every step that he took towards the front of the roller coaster he became more and more frightened. After about twenty minutes he reached the front of the line. He was sweating and his heart was pounding rapidly. The next roller coaster car pulled up and he froze. He stopped completely still and was holding everyone up in the line behind him. The older boy behind Joe knocked him out of the way and everyone past him in line. Joe realized that he had lost his chance and left Kennywood knowing that he had not conquered his fear and was unable to ride the steel phantom. He started to lose confidence in himself. Twenty years later, Joe had two young kids and a beautiful wife in his new home just outside of Dallas, Texas. He was working in a profitable law firm when he got a call from Bob Gerry. Bob was one of his best friends from highschool. Bob was a working in Pittsburgh for National City Bank. He had three children. He lived with his wife and kids in Mount Lebanon. He wanted to get together with Joe and catch up on old times. They both were excited to talk to each other and wanted to meet. Bob asked Joe if he would like to meet at Kennywood Park. Joe was not excited about going back to Kennywood, but he knew that the kids would have a good time. He agreed to meet. The next day the two families meet together at Kennywood. The two wives took the children to the rides while Joe and Bob talked about the old days. But the only thing in Joes mind was the steel phantom. He really wanted to overcome the fear of roller coasters before he left the park. He told Bob that he wanted to overcome this fear, and Bob took him to the steel phantom. Joe was a little scared but was not going to back down this time around. Joe and Bob climbed into the car. Joes heart was pounding rapidly just like before. As the car climbed up the big hill Joe started to sweat more and more. The car suddenly stopped at the top of the hill. Bob and Joe were startled and were wondering what was going on. The speaker on the front of the car came on. 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Joe was terrified because he knew that the steps were so high. He was very scared, but he carefully walked down next to Bob. When he got down to the bottom he knew that he had accomplished the greatest feat in his life. He had conquered his fears of heights and rollercoasters. Joe realized that he could go on with his life knowing that .