Silicon Valley Medical Technologies Case Study

EXECUTIVE SUMMARYSilicon Valley Medical Technologies (SIVMED) was founded as a interrogation and phylogeny squiffy. In the beginning, SIVMED performed its own basic investigate, obtained patents on promising technologies, and whence either sold or licensed the technologies to other firms which marketed the products. The firm has since then grown and is now contracted to perform research and testing for full-grownr genetic engineering firms, biotechnology firms, the US government, and is now widely recognized as the leader in an emerging growth industry. SIVMED?s founders were relatively wealthy individuals when they started company, and they pull a great deal of their own funds to the venture. Their individual(prenominal) funds, however, were soon exhausted by the extreme and rapid growth of the company. This caused them to have to raise capital from outside resources. The borrowed heavily for a few years until all funds were used. They then saturnine their sights to issuing both preferred and common equity.

SIVMED is organized into 2 divisions: the Clinical Research Division and the Genetic Engineering Division. The cardinal divisions are both located in the same buildings, nevertheless the equipment they use and their personnel are quite different. In youthful years, competition in this market has become stiffer and other large biotechnology firms have begun to recognize the opportunities in SIVMED?s research lines.



This increased competition has forced the board of directors at SIVMED to elevate their resources and apply state-of-the-art techniques in its managerial processes as hearty as in its technological processes. The financial vice chair has developed an theme for the firms cost of capital to use in capital budgeting decisions. He has requested that this cost of capital estimate and analysis be completed for the next board of directors meeting.

component 1 of this report discusses and analyzes the firms cost of capital. It...

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