Risk Analysis on Decision Making

Introduction Silicon Arts Inc. (SAI) is a company with plenty of yield potential. SAI has been in business four years manufacturing Integrated Circuits (ICs) for digital imagination products like digital cameras, medical and scientific instrumentation, videodisk players and computers. In 2001, SAI experienced a 40 % decrease in revenues due to a slowdown within the industry. Hal Eichner, Chairman, trying to guard the competitive edge within the industry has two objectives for the company. He is looking to increase market place share and keep grand with technology. The objectives can be reached by expanding the digital imaging market share or SAI can enter into the wireless communications market. The Financial Analyst has been given the task of reviewing proposals projecting revenues for a span of 5-7 years. The determining factors of the proposals will be the Net establish Value (NPR) and the Internal Rate of Return (IRR). The Profitability index number (PI) is a good tool to utilize on trivial projects so it is not beneficial to this scenario. Risk When considering the pickings of increasing the digital imaging (Dig-image) market shares and entering the wireless communication (W-Comm) market all(a) possible stake must be evaluated.

The run awayership team at SAI has the task of analyzing Dig-image and W-Comm figures to determine which option will return the company. The discounted immediate payment flow analysis will help nominate relevant cash flows by considering sunk costs, and working capital. The teaching that is put into the discounted cash flow analysis is projected approaching cash flows which may give a NPV. If there is an fault in the calculations and the NPV remain positive, management may be lead right into a forecasting risk. A forecasting risk is identified by the possibility of errors in projected cash flows that will lead to incorrect decisions (Ross, Westerfield & Jordan, 2006). The analysis showed the better option for SAI is to enter the wireless communications... If you want to get a practiced essay, order it on our website: Orderessay

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