SSM Mid term

Time Left:

Section

Uncategorized $i$

Section $C=101=10$ Marks

Instructions

I. This section has $2$ questions.

II$.$ Answer any $1$ questions.

III. Each question carries $10$ marks.

IV$.$ Upload the Excel workbook where you solve a question using the "Choose File" option provided for the corresponding question. Uploading the Excel workbook is mandatory.

V$.$ The Excel workbook must contain a sheet with the following information: Name, Roll No$.,$ Section, and Problem Name. Mentioning your Name, Roll No$.,$ Section a Problem Name is mandatory.

VI$.$ Only the final Excel model must be submitted. Marks are reserved for following best practices.

VII. $7.$ Read problems very carefully.

Question $1.$ Tejas Technologies $($TT$)$ is a telecom company that provides $4$G Services in Chennai. TT is planning to buy the rights and sell $5G$ Services in India from Sa Technologies $($ST$).$ Generally, ST sells its Intellectual Property rights to the local telecom service provider and lets them run the business in their respective territories. ST proposed to offer $5G$ services to TT for $100$ Crores. The net cash flow generated by TT during the first year is forecasted to be $17$crores in the first year. Additionally, the company is expected to grow by $15\%$ in the years $2,3,4$&$5.$ Assume the cost of capital to be $8\%.$

a$.,$ Should TT purchase $5G$ rights from ST$?$

b$.$ How would the NPV change if the expected growth rate in the net cash flow varies from $10$ to $30\%?$

c$.$ How would the NPV change if the price ST charges varies from $1$ Billion to $3$ Billion?