Valuing Project Achieve Essay

1742 Words May 18th, 2010 7 Pages
Introduction After years as a teacher and principal frustrated by the inability to effectively track school and student progress, Stacey Boyd and HBS classmate Mandy Lee founded Project Achieve, an information management system for schools. In a quickly changing industry with fast-moving competitors, Project Achieve aimed to use leading-edge technology to reduce the workload of teachers and administrators while simultaneously keeping parents and students aware of performance. In an attempt to raise capital from an array of investors, Boyd needed to assess the firm’s value before moving forward. _Project Achieve’s Competitive Advantage_ Project Achieve hopes to differentiate itself from its competitors via its emphasis on a …show more content…
(Exhibit #3) All of the costs and revenues associated with each type of customer are detailed in Exhibit #3. After calculating a WACC of 19.00% and forecasting cash flows for each type of customer, it is easy to find the net present value of each customer. Not surprisingly, two-year Express users are the only loss makers for the firm, with a value of -$386.63 per two-year Express user. Perpetual Express users, two-year Logic users, and perpetual Logic users are each worth $1,315.79, $15,588.16, and $44,659.44 respectively. (Exhibit #3) Now that we have calculated the value per customer for all of our customer classifications (Exhibit #3), we can apply the probabilities found in our decision tree (Exhibit #2) to find the overall value per targeted customer. Doing so, we find that each targeted customer has a value of $5,102.49. (Exhibit #4) Going one step farther, we matched the value per targeted customer with the forecasted number of customers targeted to find the total value of all of Project Achieve’s targeted customers. Discounted at WACC (19.0%), all of the firm’s targeted customers are cumulatively worth $78,805,398. (Exhibit #5) Using the DCF method, the after tax value of Project Achieve is $11,991,608. (Exhibit #5) The valuation of Project Achieve is extremely risky considering the dependency of the company’s cash flows on customer acquisition and

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