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MASTER IN BUSINESS ADMINISTRATIONMANAGERIAL ECONOMICS(MPME 7113)ASSIGNMENT 2PREPARED FOR AIN FARHA BINTI SALAHUDDINPREPARED BY[STUDENT NAME][STUDENT ID]SUBMISSION DATE20 JUNE 2020
MANUAL OF ASSIGNMENTMPME 7113 – ASSIGNMENT 2WRITING FORMAT;1.This assignment is to be completed INDIVIDUALLY.2.This assignment is accordingly by chapters in the syllabus.3.Answer ALL questions accordingly. 4.Reading and revising of slides, books and internet will help you to answer those questions.Submission: Softcopy: share in google classroomREMINDER: TOTAL MARKS 20% will be given upon completion and submission. 1% per day will bededucted for the late submission after due date.
Amcott Loses $3.5 Million; Manager FiredOn Tuesday, software giant Amcott posted a year end operating loss of 3.5 million. Reportedly,$1.7million of the loss stemmed from its foreign language division. At a time when Amcott was paying First National a hefty 7 percent rate to borrow short-termfunds, Amcott decided to use a $20million of its retained earnings to purchase three -year rightsto Magicword, a software package that converts generic word processor files saved as Frenchtext into English. First year sales revenue from the software was $7million, but thereafter sales were haltedpending a copyright infringement suit filed by Foreign Incorporation. Amcott lost the suit andpaid damages of $1.7 million.Industry insiders say that the copyright violation pertained to a very small component ofMagicword. Ralph, the Amcott manager who was fired over the incident was quoted as saying, “I’m ascapegoat for the attorneys who didn’t do their homework before buying the rights to theMagicword. I projected annual sales of $7 million per year for three years. My sales forecastswere right on target. Do you know why Ralph was fired? Explain your answer. As the acting manager of the Amcott and the one overseeing the foreign language department,Ralph depended on the marketing information given to him, - despite the correctness of hissales forecast on acquiring the new software. He further relied on legal division for the adviceon the contract, but the legal department did not predict the legal ramifications that may occurfrom the contract. As per the manager’s plan to utilize $20 million in purchase of the Magicwordsoftware, it depicted that $7 million will be generated annually; holding assumptions that noadditional costs will be incurred. Contrary, a net present value projection of the softwareelucidates a loss to the Amcott. However, Ralph was not fired due to the mishaps depicted on
the legal department, but due to his managerial inability- unable to utilize and process the giveninformation to foresee any possible loss due to the time value of money.
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