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Old 09-20-2010, 11:50 PM
phuongmy phuongmy is offline
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Join Date: Sep 2010
Location: Hanoi + Vietnam
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Default Understanding Assumption

Dear all,

This is my homework related to Finance. It is about Understanding Assumption. Please support me to solve it.

"Suppose a software company is considering an investment in developing a new software product line designed to help small businesses better manage their accounting and finances. The project team has concluded that this project will have a positive net present value. The teamís conclusion was based on assumption that it would take the development team 18 months to develop the product at a development cost of $10 million, and that the product would capture 10% share of the market for small business financial management software by year five, generating revenues of $100 million by this time.

As an executive of the company who is responsible for assessing the value of this opportunity, what assumptions about the project would you most want to test? What kinds of data or additional research would you ask the team to present?"


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