Sonora Executive (SE) is an IT company that operates under the laws of the United States. The mission of this company is to enable businesses and people throughout the world to achieve their full potential by creating transformative technology that eases work, play, and communication. SE develops hardware, software, and services that offer new opportunities for greater convenience and bettering of people’s lives.
SE has five critical capital investments that are Modern Workplace, Business Applications, Infrastructure, Data, and AI, and Gaming.
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Modern Workplace
The motivation for this capital investment is the desire for SE to reach a new target audience by empowering modern-day employees and preparing them for a current office setting. SE is also motivated by the need to protect workplace data from increasing cybersecurity threat in its Modern Workplace capital investment. Subsequently, the company provides cloud storage that broadens workplace reach with under-penetrated and new markets. This idea covers small markets with as few as three employees to those with as much as one million or more staff. Therefore, the Modern Workplace capital investment of SE has become a hub for teamwork and connection among employees.
Business Application
SE capital investment in Business Applications is marked with the digitization of different approaches for critical business functions. The motivation for this capital investment is the need to provide alternative monolithic modular for unlocking insights among different business needs. These business applications are designed in a way that they connect with open data initiative to mix virtual world with reality and create immersive experiences for the digitization of physical spaces. Furthermore, Business Applications by SE transform training, design, and collaborate first-line workers, and connects professionals to economic opportunities, which are some of the key motivations behind the idea of this capital investment.
Infrastructure
The motivation behind this capital investment is the need to thrive in an era where intelligent edge and intelligent cloud push clients to engage consistent computer stack that must be available all the time. SE’s infrastructure, Hypeman, extends across application platform, identity data, and security and management, which is designed to give SE architectural advantage over their competitors. Aggressive investment in infrastructure, in particular, Hypeman, has also been motivated by the expansion of SE’s global data center footprint, more than any other application platform provider in the field of technology.
Data and AI
SE is motivated into this capital investment by the need to extract insights into an increasing number of data collection in a comprehensive data estate. Data and AI is simply an investment that makes it easier to open source-powered applications and expand opportunities in the cloud space. Subsequently, Data and AI are products of SE that are incorporated in the Hypeman technology, and they offer advanced data analytics, data preparation, and machine learning, which are significantly important in the current technological trends. Also, the increase in the number of developers that would want to use Hypeman in creating AI applications has motivated SE in venturing into this capital investment since the program brings auto-translation services to developers, where their data is on edge.
Gaming
The capital investment in Gaming by SE is motivated by the desire to pursue expansive gaming opportunities. This system expounds on the creation and distribution of games, which is a good investment since it is aggressive in content and appeals to people from various walks of life irrespective of gender or age. The Hypeman game, now with over 23 million active users, accelerates the vision and the mission of SE in becoming the best IT services provider in the world.
Business Application and Modern Workplace are two mutually exclusive projects of SE. Therefore, their cash flows statements are:
| Year |
Modern Workplace (in million $) |
Business Application (in million $) |
||
| Initial Investment | Operating Cash | Initial Investment | Operating Cash | |
| 1 |
-19,086 |
7,336 |
-14,900 |
3,811 |
| 2 |
34,261 |
3,818 |
32,780 |
2,760 |
| 3 |
62,310 |
1,154 |
58,374 |
6,571 |
| 4 |
13,037 |
7,880 |
11,988 |
4,261 |
| 5 |
15,461 |
4,900 |
14,635 |
5,175 |
| 6 |
4,481 |
639 |
4,563 |
86 |
| 7 |
306 |
100 |
1,110 |
901 |
| 8 |
29,025 |
539 |
26,078 |
4,412 |
| 9 |
876 |
639 |
5,439 |
489 |
| 10 |
29,901 |
7,925 |
25,639 |
7,746 |
Payback Period for Each Project
| Year |
Modern Workplace (in million $) |
Business Application (in million $) |
| 1 |
-11,750 |
-11,089 |
| 2 |
30,443 |
30,020 |
| 3 |
61,156 |
51,803 |
| 4 |
5,157 |
7,727 |
| 5 |
10,561 |
9,460 |
| 6 |
3,842 |
4,477 |
| 7 |
206 |
209 |
| 8 |
28,486 |
21,666 |
| 9 |
237 |
4,950 |
| 10 |
21,976 |
17,893 |
The NPV
A discount rate of 8% is chosen for the Modern Workplace project, and that of 9% is chosen for Business Application. Having a higher discount rate in Business Application that Modern Workplace is significant to promote the project to broader markets. Otherwise, the 8% discount rate at Modern Workplace is important in avoiding multiple losses as the project has already picked up in the market.
Subsequently, NPV = F / [ (1 + i)^n ]
Where,
PV = P resent V alue
F = F uture payment (cash flow)
i = Discount rate (or i nterest rate)
n = the n umber of periods in the future the cash flow is
Thus;
|
Modern Workplace (in million $) |
Business Application (in million $) |
||
|
-11,750 |
-11,089 |
||
|
30,443 |
30,020 |
||
|
61,156 |
51,803 |
||
|
5,157 |
7,727 |
||
|
10,561 |
9,460 |
||
|
3,842 |
4,477 |
||
|
206 |
209 |
||
|
28,486 |
21,666 |
||
|
237 |
4,950 |
||
|
21,976 |
17,893 |
||
| Discount rate | 8% |
Discount rate |
9% |
| NPV | $102,975.24 |
NPV |
$90,212.18 |
IRR
|
Modern Workplace (in million $) |
Business Application (in million $) |
||
|
-11,750 |
-11,089 |
||
|
30,443 |
30,020 |
||
|
61,156 |
51,803 |
||
|
5,157 |
7,727 |
||
|
10,561 |
9,460 |
||
|
3,842 |
4,477 |
||
|
206 |
209 |
||
|
28,486 |
21,666 |
||
|
237 |
4,950 |
||
|
21,976 |
17,893 |
||
| IRR | 2.9524% |
IRR |
2.9505% |
Therefore, the project to implement based on all the three techniques provided is Modern Workplace because it is a project that gives better prospects for future success.
The two qualitative (non-financial) factors that must be considered for each proposal are meeting the requirements for current and future legislation and matching good practice and industry standards.
