Conch Republic Electronics - Corporate Finance

1. INTRODUCTION

Traditionally a personal digital assistant (PDA), also known as a handheld computer, is a small handheld device that combines common features such as computing, internet, and networking. Previously PDAs which are pen-based enable users to organize personal information such as contacts, schedules, appointments and provide computing and information storage for business use. However, PDAs have made drastic changes over the years. As technology has improved, PDAs today are available in stylish keyboard or touchscreen version and combine with the mobile phone capability. These handheld devices integrate mobile phone capability are called smartphones. Presently smartphones allow users to store information, e-mail, and install programs / software, along with using a mobile phone in one device.

Such important advance in science and technology has forced manufacturers to find ways to improve and differentiate their products among the competitors. Conch Republic Electronics (CRE), which is a mid-sized, reputable electronics manufacturer located in Key West, Florida is no exception to this changes. They are now considering very seriously to develop a more sophisticated PDA to replace their existing revenue-driven but outdated PDA. The newly planned PDA will not only maintain all existing features but also include the mobile phone capability and new software applications to attract business users and university students. However, the company is facing many challenges in this new product development. A lot of factors need to be considered especially in projecting the financial performance and expected return of the project as well as the risks involved to the board of directors.

2. CAPITAL INVESTMENT DECISIONS

Corporate finance management is largely concerned about financing, dividend and investment decisions of the firm that has developed to maximize the market