HIGH MOUNTAIN TECHNOLOGIES Harvard Case Solution & Analysis

HIGH MOUNTAIN TECHNOLOGIES Case Solution 

Introduction

 (HMT). In this new position, he was in-charge of assessing separate items that the panel was considering for Dispatch. According to the organization’s strategy, the net present quality (NPV) methodology was used, and a reasonable expense of capital was resolved for every task.

high mountain technologies case solution

high mountain technologies case solution

Rogers did not have any possible involvement in the territories of capital planning or cost of capital, yet he studied these zones when he finished his Bachelor of Commerce degree five years already. In identifying his new obligations, he bought various reference books and started a taught regiment of home study; he was focused on being readywhen he got his first task.

HMT was a broadened research and assembling organization that created an open exhibit of original items taking into account protected innovation. With this patent insurance, HMT could procure primary benefits and secureitself from extraordinary global value rivalry. HMT's corporate base camp and research and outline office were situated in Toronto, and it had various creation plants in Ontario and also Michigan, Ohio and Indiana

Problem

Along these lines, initially one of the issues for this situation depends on the actuality that HMT contracted the affirmed administration bookkeeper who did not have any involvement in zones of capital planning or cost of capital; subsequently, the organization would perhaps have issues since it has a great responsibility. Another problem is to settle on a definite choice in which of two undertakings to contribute cash: In GPS transmitter that fits into the shoes of kids or little observation flying machine with the capacity to stay noticeable all around for 48 hours). Apart from that, Rogers has been given the task of finishing a capital planning investigation of these undertakings.

Cost of capital

The cost of capital evaluates long term investments which include resources, for example, equipment, machinery, and/orland. This procedure goes for recognizing the most productive business alternative.  The degree of profitability (ROI) is one methodology for considering benefits as to capital contributed. Hence, a speculation choice, a financing choice, and a profit choice shape a capital venture investigation.

For the project, the GPS transmitter industry average is given and we just have to calculate beta and treasury from the industry average. Moreover,we have to calculate the cost of equity so first of all,we have to add beta and treasury then multiply it with market premium, and then weight of debt is given 40% therefore,our weight equity will be 60%, then we have to apply the formula and calculate the cost of capital

For project Surveillance aircraft,first of allwe have to calculate percentage return on the stock index and percentage return sky hawk and from percentage value, we have to calculate beta by putting formula. After beta, we have to calculate equity and debt. risk-free rate, the risk premium is given, and beta is also calculated. Therefore,we just have to calculate beta and debt and through beta and debt, as well as we have to calculate the cost of capital by applying the formula.

Results of the NPV

The net present value methodology is the most instinctive and exact valuation way to deal with capital planning issues as well as it reduces the after-assessment money streams by the weighted normal expense of capital permits to identify if an undertaking will be productive or not. Moreover, aside from IRR technique, NPVs reveal how beneficiala task will be as compared to the options....................

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