Mint Technologies, a startup in the IT infrastructure space, is planning to enter the computer networking market with a specialized offering—VPN…

Mint Technologies, a startup in the IT infrastructure space, is planning to enter the computer networking market with a specialized offering—VPN connectivity solutions for enterprises with distributed office networks. The company recently won a significant tender from a major national bank to set up secure VPN connections across 100 branches. The leadership team is excited but cautious, as this move requires significant upfront investment and ongoing operational capability. To evaluate the financial viability of this project, you have been hired as a consultant. They have forecasted their numbers for 5 years and they have assumed that they will grow at industry average (3%) afterwards.Mint will invest all the money for CAPEX in the infrastructure and equipment. Mint is planning to issue 50Mn shares in lieu of the amount.Mint will have to keep upgrading the infrastructure and equipment to cover different offices of various clients.Mint expects an initial investment of around 150Mn in network access as an initial setup cost for connecting different offices. Mint needs to invest additional 10Mn every year starting from beginning and is expected to grow 10% every year.The equipment investment varies with number of branches/ offices. This varies with time and currently it is 0.1 Mn per office.Initially, Mint has won a tender of 100 branches of a bank and expecting it to grow at 30% for next 5 years.Mint is expecting to have a maintenance cost of 10% for equipment and 15% for network.To handle all this, current manpower cost is 1MnMint has entered into an agreement with local authority and has agreed to share 15% of the revenue with the same.Mint is expecting to generate revenue of 0.5 Mn per office and to remain competitive in the market, it is not going to increase with inflation.Capital expenditure and operating expenses will grow 10% every year.Tax slab in the country is 30% and depreciation of the equipment and network is assumed to be 10%. Discounting rate is 20%.Assume all the expenditure including initial setup cost from year 1. Based on the above information, you are required to answer following 5 MCQs: