Question

Business Law

Suppose that an automobile manufacturing company must choose between two alternatives: contributing $1 million annually to the United Way or reinvesting the $1 million in the company. In terms of ethics and social responsibility, which is the better choice? Why?

Answer #1

A company must make a choice between two investment
alternatives. Alternative 1 will return the company $33,000 at the
end of five years and $60,000 at the end of seven years.
Alternative 2 will return the company $8,000 at the end of each of
the next seven years. The company normally expects to earn a rate
of return of 7% on funds invested. Compute the present value of
each alternative and determine the preferred alternative according
to the discounted cash...

A company must make a choice between two investment
alternatives. Alternative 1 will return the company $20,000 at the
end of three years and $70,000 at the end of six years.
Alternative 2 will return the company $10,000 at the end of each
of the next six years. The company normally expects to earn a rate
of return of 15% on funds invested. Compute the present value of
each alternative and determine the preferred alternative according
to the discounted cash...

Seri Kitchen is a firm manufacturing kitchen cabinet. The
company must choose between two asset purchases. The annual rate of
return and related probabilities given below summarize the firm's
analysis. Asset A Asset B Rate of Return Probability Rate of Return
Probability 10% 30% 5% 40% 15% 40% 15% 20% 20% 30% 25% 40% i. For
each asset, compute the expected rate of return. ii. For
each asset, compute the standard deviation of the expected return.
iii. For each asset,...

An oil-drilling company must choose between two mutually
exclusive extraction projects, and each requires an initial outlay
at t = 0 of $12.8 million. Under Plan A, all the oil would be
extracted in 1 year, producing a cash flow at t = 1 of $15.36
million. Under Plan B, cash flows would be $2.2744 million per year
for 20 years. The firm's WACC is 11.3%.
Construct NPV profiles for Plans A and B. Enter your answers in
millions. For...

Cuomo Machinery Company must choose between two machines,
Machine A and Machine B, and the company can only choose one
machine. The company plans to replace the machine when it wears out
on a perpetual basis, NOT for one-time use. • Machine A costs
$40,000 now and will last for three years. It will require an
aftertax cost of $10,000 per year after all relevant expenses. •
Machine B costs $5,000 now and will last for four years. The
after-tax...

Consider the problem of a consumer who must choose between two
types of goods, good 1 (x1) and good 2 (x2) costing respectively p1
and p2 per unit. He is endowed with an income m and has a
quasi-concave utility function u defined by u(x1, x2) = 5 ln x1 + 3
ln x2. 1. Write down the problem of the consumer. 1 mark 2.
Determine the optimal choice of good 1 and good 2, x ∗ 1 = x1(p1,...

Assume you are trying to choose between two investments: 1. A
$5,000 bond with 6% interest rate and repayment in 10 years. 2.
$5,000 invested in company stock that has traditionally paid $100
dividend annually. (The assumption is that you may hold the stock
indefinitely or may sell it at any time.) Decide on one piece of
additional information you would like to know that may help you
decide which investment you will choose and why it would be
helpful.

An oil-drilling company must choose between two mutually
exclusive extraction projects, and each requires an initial outlay
at t = 0 of $13 million. Under Plan A, all the oil would be
extracted in 1 year, producing a cash flow at t = 1 of $15.6
million. Under Plan B, cash flows would be $2.31 million per year
for 20 years. The firm's WACC is 12.2%.
Construct NPV profiles for Plans A and B. Enter your answers in
millions. For...

An oil-drilling company must choose between two mutually
exclusive extraction projects, and each requires an initial outlay
at t = 0 of $11.6 million. Under Plan A, all the oil would be
extracted in 1 year, producing a cash flow at t = 1 of $13.92
million. Under Plan B, cash flows would be $2.0612 million per year
for 20 years. The firm's WACC is 12.7%.
Construct NPV profiles for Plans A and B. Enter your answers in
millions. For...

An oil-drilling company must choose between two mutually
exclusive extraction projects, and each requires an initial outlay
at t = 0 of $11 million. Under Plan A, all the oil would be
extracted in 1 year, producing a cash flow at t = 1 of $13.2
million. Under Plan B, cash flows would be $1.9546 million per year
for 20 years. The firm's WACC is 12.8%.
Construct NPV profiles for Plans A and B. Enter your answers in
millions. For...

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