Alpha One Software & VirtualStream Minicases
Kayla Sullivan
Fitchburg State University
MGMT 9230 Entrepreneurial Finance
Professor Webb
September 30th. 2025
, Introduction of Topic and Facts as Presented of the Case
Alpha One Software Corporation is a development software firm created by Arlene lo,
that provides organizations with information on their customers and predictions on customer
retention and satisfaction (Leach, 2021). This organization received venture capital for start up
operation costs and venture financing and is currently able to obtain bank loans and to issue
long-term debt. The bank loan’s interest rate is 10 percent, and the long-term debts real interest
rate is 3 percent, inflation premium is 4 percent, and risk premium is 7 percent, with the stock
investment risk premium totaling 13 percent.
The VirtualStream Company is a streaming company. They collect video and audio from
clients and digitally store them on the network for customers to later watch on the
internet(Leach, 2021). VirtualStream raised $500,000 in founder’s capital the year before and is
currently looking to add more financial capital from investors in the form of issuing and selling
securities of stock. They are hoping to obtain $750,000 from these investors.
A Detailed Case Discussion
Alpha One Software Corporation
Calculate Alpha One’s net operating profit after taxes (NOPAT). Why does the NOPAT
differ from the earnings after taxes?
NOPAT is net operating profit after taxes and is used to understand the economic value of
a company. NOPAT is calculated by using the earnings before interest and taxes (EBIT)
multiplied by one minus the tax rate (Leach, 2021). Alpha One’s EBIT is $144,000 and their tax
Kayla Sullivan
Fitchburg State University
MGMT 9230 Entrepreneurial Finance
Professor Webb
September 30th. 2025
, Introduction of Topic and Facts as Presented of the Case
Alpha One Software Corporation is a development software firm created by Arlene lo,
that provides organizations with information on their customers and predictions on customer
retention and satisfaction (Leach, 2021). This organization received venture capital for start up
operation costs and venture financing and is currently able to obtain bank loans and to issue
long-term debt. The bank loan’s interest rate is 10 percent, and the long-term debts real interest
rate is 3 percent, inflation premium is 4 percent, and risk premium is 7 percent, with the stock
investment risk premium totaling 13 percent.
The VirtualStream Company is a streaming company. They collect video and audio from
clients and digitally store them on the network for customers to later watch on the
internet(Leach, 2021). VirtualStream raised $500,000 in founder’s capital the year before and is
currently looking to add more financial capital from investors in the form of issuing and selling
securities of stock. They are hoping to obtain $750,000 from these investors.
A Detailed Case Discussion
Alpha One Software Corporation
Calculate Alpha One’s net operating profit after taxes (NOPAT). Why does the NOPAT
differ from the earnings after taxes?
NOPAT is net operating profit after taxes and is used to understand the economic value of
a company. NOPAT is calculated by using the earnings before interest and taxes (EBIT)
multiplied by one minus the tax rate (Leach, 2021). Alpha One’s EBIT is $144,000 and their tax
