Submitted by dreacarolin on October 22, 2007

• Category: Business
• Words: 870
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Risk Analysis On Investment Decisions

Silicon Arts Inc. (SAI) is a manufacturer of digital imaging integrated circuits. After 4 years in business, Chairman Hal Eichner is looking at increasing SAI’s market share while keeping up with technology. SAI is looking at expanding the existing digital imaging market share and/or entering the wireless communication market. Currently, SAI’s market is divided between the United States (70%), Europe (20%) and Southeast Asia (10%) with an annual sales turnover of 180 million dollars. (University of Phoenix, 2007)
SAI evaluated two mutually exclusive proposals using Net Present Value (NPV), Internal Rate of Return (IRR) and Profitability Index (PI) calculations. While these...

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