Working Capital Summary

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WORKING COMPUTERS, INC. - WCI Jennifer Sobieski, a marketing analyst – cost engineer To evaluate whether or not WCI should sell a division of the firm · which has been losing market share · and requires a great deal of new investment to remain competitive. CEO – Steward workman CFO – Tom LaPonte Problem; A personal date appliance (PDA) - once led the market in feature and innovation - Fall prey to competition. · Political issues involving the wayward division · CEO has decided to use the capital committed to Bernoulli to boost the ailing performance of other parts of the firm. Bernoulli device: · a complete new and innovative interface for the WCI PDA. · Handheld device…show more content…
- 1%decline in sale for each quarter. This was due to the compatibility of the device. Current progress: To make it compatible to every personal computer on the market; Bernoulli labs were working on major upgrades on the device as well as on the interface software To complete the research, $18 million was needed for the following month for its development. With the new product, an estimation of 8% gain from the market within the 1st year, and 4% per year after that. Rebuttal from CEO: The amount requested was ‘insane’ and it can “earn at least our cost of capital for the shareholders” - The firm had enough cash available for this type of investment – Jennifer claimed that he was taking the allocation of that money personally. Jennifer had forecasted - unit sales for the periods 2004 – 2009 (6years) - calculated demand with and without the market share from the new product expected return. Exhibit 1 - Unit sale projection Cost of good sold: 60% of the unit price operating expenses (excluding depr.): 24% of total revenues expected sale units by end of 2003 @ $495: 300,000 from the revised Bernoulli: COGS 54% of the retail price operating expenses: 26% (due to advertising) strategic planning purposes: Bernoulli was treated as an asset, allocation of depreciation with cost recovery (MACRS) 10 yr class, with 5 yrs of operation. 1999 - invested $56 million. recovery

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