Management and the Technology Professional – B302
Investment analysis at Yahoo during the Microsoft acquisition proposal
Case study for coursework assignment
CASE STUDY QUESTION
This question
must be answered in your coursework submission.
- Imagine you are the Yahoo software engineer in the case study source. Assess the probability associated with the available project options in order to conduct analysis using decision tree and net present value (NPV) techniques. Would you start or cancel the client project?
CASE STUDY SOURCE
Microsoft made a public announcement of its offer to acquire Yahoo on 31 January 2008. You are a software engineer in the small business advertising division at Yahoo. On 3 March 2008, you received confirmation from a client in London for a new advertising campaign. The revenue value of the project is
£90,000 when completed. The advertising campaign is planned to execute for a period of
4 months.
The project requires a commitment of
£25,000 for various setup and inter-agency fees. This expense would be spent at the start of the project and not recoverable even if the project fails to complete.
The
decision would be affected by whether Microsoft succeeds in its bid to acquire Yahoo. If Microsoft acquires Yahoo and the project successfully completed, then there would be an additional
£20,000 of expenses at the completion of the project due to changes of advertising contracts. Microsoft fails to acquire Yahoo and the project successfully completed, then the full revenue value of the client project would be gained. If Microsoft acquires Yahoo and the project did not go ahead, then nothing was lost. If Microsoft fails to acquire Yahoo and the project did not go ahead, then the revenue value of the project would be considered a loss.
ADDITIONAL RESOURCES
