Homework Help is Here – Start Your Trial Now!
Business
Finance
2. With the goal and role of financial management in business in mind, determine whether the project should be continued or abandoned. Use the following facts and figures below as your reference.

2. With the goal and role of financial management in business in mind, determine whether the project should be continued or abandoned. Use the following facts and figures below as your reference.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question
100%
Directions: 1. Read and analyze the given scenario. 2. With the goal and role of financial management in business in mind, determine whether the project should be continued or abandoned. Use the following facts and figures below as your reference. 3. Present your recommendation and explain the reasons in 4-6 sentences. 4. Write your answer on the blanks provided. Company A accepts a project to create a Learning Management System (LMS) for a big client. This company also creates and produces online training materials such as digital videos and ebooks. The LMS project itself has a projected revenue of $850,000. So far, the expenses amounting to $600,000 have been incurred by Company A on the project. This is way beyond the allocated budget. Due to this, the management contemplates on whether the project should still be continued. 1. Customized Software/Program Already purchased for $80,000 (apart from the $600,000 mentioned above), this software cannot be used for any other products of Company A. As the LMS was customized for this particular client, Company A cannot resell this to other customers. 2. Professional Fees These will cost an additional $125,000. The professionals hired for the LMS project are widely skilled in technology and may be tapped to create digital videos and books. If these people will not continue with the LMS project, they may be assigned to create 50 training videos which would be sold at $30,000 each. 3. Project management If the project pushes through, the company will incur an additional cost of $125,000 for professional fees. If not, the hired professionals would be tapped to create digital videos and books. They may be assigned to create 50 training videos which would be sold at $30,000 each
Transcribed Image Text:Directions: 1. Read and analyze the given scenario. 2. With the goal and role of financial management in business in mind, determine whether the project should be continued or abandoned. Use the following facts and figures below as your reference. 3. Present your recommendation and explain the reasons in 4-6 sentences. 4. Write your answer on the blanks provided. Company A accepts a project to create a Learning Management System (LMS) for a big client. This company also creates and produces online training materials such as digital videos and ebooks. The LMS project itself has a projected revenue of $850,000. So far, the expenses amounting to $600,000 have been incurred by Company A on the project. This is way beyond the allocated budget. Due to this, the management contemplates on whether the project should still be continued. 1. Customized Software/Program Already purchased for $80,000 (apart from the $600,000 mentioned above), this software cannot be used for any other products of Company A. As the LMS was customized for this particular client, Company A cannot resell this to other customers. 2. Professional Fees These will cost an additional $125,000. The professionals hired for the LMS project are widely skilled in technology and may be tapped to create digital videos and books. If these people will not continue with the LMS project, they may be assigned to create 50 training videos which would be sold at $30,000 each. 3. Project management If the project pushes through, the company will incur an additional cost of $125,000 for professional fees. If not, the hired professionals would be tapped to create digital videos and books. They may be assigned to create 50 training videos which would be sold at $30,000 each
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Basic Accounting Terms
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS