Silicon Arts
Investment techniques used in corporate finance when making decisions on projects usually focus on cash flows of the firm (Ross, 2004). Because of drastic changes in the business environment over the last decade, managers are requesting better, more accurate information, and improved techniques to meet company needs for making major decisions with data consisting of clear goals, a planned design, high ethics, revealed limitations, adequate analysis, and justified conclusions (Cooper and Schindler, 2003). Companies must make use of several valuation techniques used to determine internal and external investment decision strategies and the risk associated with the investment decisions.
Silicon Arts, Inc.
Silicon Arts Inc. (SAII) is a manufacture of digital imaging Integrated Circuits (IC) that are used in digital cameras, DVD players, computers, as well as medical and scientific instrumentation. The major SAIles are in North America, Europe , and South East Asia. This company annual SAIles turnover is $180 million. SAII grew rapidly in its first years due to the semiconductor industry boom. As the industry began to slow down, SAII watched its revenues fall by 40%. SAII survived the decrease in revenues by cutting costs and freezing capital expenses. Shrewdly, SAII continued its research and development efforts and developed the IC 1032, a specialized chip used in data embedded mobile phones (Scenario, 2008. University of Phoenix). Hal Eichner, SAII Chairman, has a two point strategy for the company: increase market share and keep pace with technology by expanding the existing digital images market sharing and enter the wireless communication market.
Internal Investment Strategies
SAI must consider what internal and external investment strategies will yield the best results for the company. The internal strategies used must be based on adequate capital budgeting calculations. A capital budget is a plan for raising large and...
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