Introduction After years as a teacher and principal frustrated by the inability to effectively track school and student progress, Stacey Boyd and HBS classmate Mandy Lee founded Project Achieve, an information management system for schools. In a quickly changing industry with fast-moving competitors, Project Achieve aimed to use leading-edge technology to reduce the workload of teachers and administrators while simultaneously keeping parents and students aware of performance. In an attempt to raise capital from an array of investors, Boyd needed to assess the firm’s value before moving forward. _Project Achieve’s Competitive Advantage_ Project Achieve hopes to differentiate itself from its competitors via its emphasis on a
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We assumed an asset beta of 1.15 (the median asset beta of the three comparable companies) and a debt beta of 0 (with no interest bearing debt) for Project Achieve. Using the 30-year treasury rate (5.94%) as the risk-free rate because of Project Achieve’s expected life and a historical 7.0% market risk premium, we calculated Project Achieve’s discount rate at 14.0%. This discount rate values Achieve as a public company, comparable to its public counterparts. As a non-public start-up, however, Project Achieve is far more risky than the more established comparables discussed above. Thus, we added a 5% start-up risk premium to reach an appropriate 19% discount rate for the valuation of Project Achieve. (See Exhibit #1) Valuing Project Achieve In order to forecast the value provided by each customer type to Project Achieve, we must first identify the breakdown of customers based on the probabilities given in the case, and then forecast the cash flows associated with each type of customer. To determine the probability of a generic targeted school falling into any customer category, we created a decision tree. (Exhibit #2) Per our analysis, there are five end user states – perpetual Achieve Express users, two-year users of Achieve Express, perpetual users of Achieve Express and Achieve Logic, two-year users of Achieve Express and Achieve Logic, and targeted schools that didn’t respond – all with varying

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