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A CFO puts forward the following statements with regard to a potential investment. Are they right or wrong? and why ?
- Statement 1
Due to the decline in our production, thirty workers would have to be redundant in the coming years. If we decide to include the new product in our product range, we can retain at least 15 workers and possibly even more. This is a windfall and saves us the additional labor costs, because those workers are already employed.
- Statement 2
The impact of the expansion of our product range on the current product range is not yet entirely clear. Now this is a trivial problem since the possible shift of sales will take place within the same company . We can therefore ignore it for our investment analysis.
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Becker Industries is considering an all equity capital structure against one with both debt and equity. The all equity capital structure would consist of 38,000 shares of stock. The debt and equity option would consist of 19,000 shares of stock plus ..
COMM Company is considering an investment in a new inventory control system. The system will require a substantial up-front investment but is expected to provide annual cash cost savings for the next 6 years. Prepare an exhibit that displays the outc..
The new appropriate discount rate will be 7.6 percent. What will be the change in the bond’s price in dollars and percentage terms?
Suppose a portfolio had an arithmetic average return of 11 percent for a 5-year period.
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