Read through the article about Imagination Tech and its market "implosion" thanks to the announcement that Apple is going to begin using its own Graphics Chips in upcoming phones (years from now).

Article: http://fortune.com/2017/04/03/apple-imagination-tech-shares-crash/

Notice the share price of Imagination Tech since the issue happened. Is the company undervalued now from this crash? Why or why not? Why do you think the stock has crashed so far, even though Apple's announcement won't affect them for years? what do you think this company might be able to do to recover? How do you think the market "discounts" this firm's cash flows from a risk perspective? Do you think this has changed after the Apple announcement?

Also, from a capital budgeting perspective, I would like you to think about the "Project" that Imagination might need to implement to survive. How do you think company executives would have approached the cash outflows that were necessary to help fix this situation? Think about how future cash flows would be impacted if the company did nothing, what would happen to future cash flows if the company successfully created a new product or innovation that helps increase cash flows? Would managers find a positive NPV from their capital budgeting analysis?