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QUESTION

Track Software, Inc. S even years ago, after 15 years in public accounting, Stanley Booker, CPA, resigned his position as manager of cost systems for...

Please see attached integrative case and answer below questions. 

a. (1) On what financial goal does Stanley seem to be focusing? Is it the correct

goal? Why or why not?

(2) Could a potential agency problem exist in this firm? Explain.

e. What recommendation would you make to Stanley regarding hiring a new software

developer? Relate your recommendation here to your responses in part a.

f. Track Software paid $5,000 in dividends in 2015. Suppose that an investor approached

Stanley about buying 100% of his firm. If this investor believed that by

owning the company he could extract $5,000 per year in cash from the company

in perpetuity, what do you think the investor would be willing to pay for the firm

if the required return on this investment is 10%?

g. Suppose that you believed that the FCF generated by Track Software in 2015

could continue forever. You are willing to buy the company in order to receive

this perpetual stream of free cash flow. What are you willing to pay if you require

a 10% return on your investment?

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