Space Sky Flight Ltd Business Case Analysis

Running Head: BUSINESS FINANCE 1
Business
Finance
(Student Name)

BUSINESS FINANCE 2
Table of Contents
Introduction......................................................................................................................................3
Recommendations based on Base Case analyses............................................................................3
Further Analysis...............................................................................................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................5

BUSINESS FINANCE 3
Introduction
In the recent years, capital budgeting is becoming increasingly more essential as a kind of
managerial tool. It helps the company to take reliable decision while investing in any new project
(Almazan, Chen, and Titman, 2017). One of the companies Space Sky Flight Ltd has disbursed
approximately $6.5 million in the department of research and development over the last 12
months for updating a drone that is enough proficient to fix the satellites that will help them to
compete in the industry of space. The company has three options either they can manufacture
such product buy its own or licensing another company to manufacture and enjoy with the
royalty amount. The company has also an option to sell its patent as well. In the following part
there will be detailed analyses of the options that is provided to the company according to which
they can make the decision efficiently
Base Case Analysis Recommendations
On the basis of base case analysis it has been found that option A showcase that the company
should start engineering the product and sell unswervingly to the marketplace. Option second
represents that the company should start licensing another organization to manufacture as well as
sell the creation in yield for a royalty. According to Option C, the Space Sky Flight Ltd should
sell its patent privileges entire to the other corporation to play safe game and protect its interest
from any risk. Therefore, in order to analysis the base case, it understood that the corporation
must adopt Option B according to which the company should start licensing another corporation
to produce as well as sell the produce due to the main reason such option has earned highest
NPV which is 39.1. In order to adopting such method, the company can able to control over its
cost and will able to earn good return from the business which is expected while starting the