1. Discuss: Firms often involve themselves in projects that do not result directly in profits. For example, Apple donated $50 million to Stanford University hospitals and another $50 million to the African aid organization (Product) RED, a charity fighting against AIDS, tuberculosis, and malaria. Do these projects contradict the goal of maximization of shareholder wealth? Why or why not?
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1. Discuss: Firms often involve themselves in projects that do not result directly in profits. For example, Apple donated $50 million to Stanford University hospitals and another $50 million to the African aid organization (Product) RED, a charity fighting against AIDS, tuberculosis, and malaria. Do these projects contradict the goal of maximization of shareholder wealth? Why or why not?
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- Firms often involve themselves in projects that do not result directly in profits. For example, Microsoft corporation donated $10 million to Stanford University hospitals and another $40 million to the African aid organization (Product) RED, a charity fighting against AIDS, tuberculosis, and malaria. Do these projects contradict the goal of maximization of shareholder wealth? Why or why not? What is the agency problem, and how might it impact the goal of maximization of shareholder wealth? What is corporate governance? What role does a corporation’s board of directors play in corporate governance? The manager of Golden Ray Corporation receives a bonus if company profits exceed $1,000,000 this year. During the final week of the year, the manager changes an accounting policy that will increase reported profits from $950,000 to $1,025,000, triggering his bonus. The change in profits of $75,000 will reverse itself in the next year, and the accounting change has no impact on…7. If all companies only focused on making a profit and increasing shareholdervalue, and not giving to charity, would society be better off? Explain.A share in pharmaceutical company X is estimated to be worth £200 if the clinical trials for a new painkiller it has developed show no significant side effects and £100 if they do. Assume that the market assigns equal probability to both events, while the company's executives have full knowledge of the trials' results and act to maximize the wealth of existing shareholders. Finally, assume that the company generates sufficient cash flows to meet all its investment needs and carries no debt. Which of the following statements is the most accurate? If the company announces an equity issue, its post announcement share price will jump to a level above £150 If the company announces an equity issue, its post announcement share price will drop to a level below £50 If the company announces an equity issue, its post announcement share price will drop to a level below £150 If the company does not announce an equity issue, its share price will drop to a…
- In 1970, the great American economist and a Nobel laureate Milton Friedman argued that “the social responsibility of business is to increase its profits”. He wrote that a company has no social responsibility to the public or society, and its only responsibility is to its shareholders. Critically evaluate his statement. Do you agree or disagree? Why?A share in pharmaceutical company X is estimated to be worth £200 if the clinical trials for a new painkiller it has developed show no significant side effects and £100 if they do. Assume that the market assigns equal probability to both events, while the company's executives have full knowledge of the trials' results and act to maximize the wealth of existing shareholders. Finally, assume that the company generates sufficient cash flows to meet all its investment needs and carries no debt.which if the following is most accurate? a.If the company announces an equity issue, its post announcement share price will jump to a level above £150 b.If the company announces an equity issue, its post announcement share price will drop to a level below £50 c.If the company announces an equity issue, its post announcement share price will drop to a level below £150 d.If the company does not announce an equity issue, its share price will drop to a level below £150Suppose you are the president of a large corporation located in Seattle, Washington. How do you think the stockholders will react if you decide to increase the proportion of the company’s assets that is financed with debt from 35 percent to 50 percent? In other words, what if the firm used much more debt to finance its assets?
- A share in pharmaceutical company X is estimated to be worth £200 if the clinical trials for a new painkiller it has developed show no significant side effects and £100 if they do. Assume that the market assigns equal probability to both events, while the company's executives have full knowledge of the trials' results and act to maximize the wealth of existing shareholders. Finally, assume that the company generates sufficient cash flows to meet all its investment needs and carries no debt. Which of the following statements is the most accurate? A. If the company announces an equity issue, its post announcement share price will jump to a level above £150 B. If the company announces an equity issue, its post announcement share price will drop to a level below £50 C. If the company announces an equity issue, its post announcement share price will drop to a level below £150 D. If the company does not announce an equity issue, its share price will drop to a level below £150Lena Kay and Kathy Lauder have a patent on a new line of cosmetics. They need additional capital to market the products, and they plan to incorporate the business. They are considering the capital structure for the corporation. Their primary goal is to raise as much capital as possible without giving up control of the business. Kay and Lauder plan to invest the patent (an intangible asset, which will be transferred to the company’s ownership in lieu of cash) in the company and receive 100,000 shares of the corporation’s common stock. They have been offered $100,000 for the patent, which provides an indication of the fair market value of the patent. The corporation’s plans for a charter include an authorization to issue 5,000 shares of preferred stock and 500,000 shares of $1 par common stock. Kay and Lauder are uncertain about the most desirable features for the preferred stock. Prior to incorporating, they are discussing their plans with two investment groups. The corporation can…1. How is hiring the “next generation” of Chinese elites different from practices here in North America. Is it the same as Clinton’s daughter securing a job at a hedge fund company? 2. What are some of the moral principles involves here and what are some of the consequences of this practice? How does any company stay competitive if others choose to conduct unethical business practices?
- Financial Institutions are intermediaries that play a vital role in nation-building. They source funds for businesses to engage in projects that are profitable, maximize shareholder wealth, and build communities. What is a project that is worthwhile, has the potential to earn profits, and will benefit the community in the long term? List down those projects and What financial institutions can help you achieve your dream of a sustainable business for your shareholder or community?If financial managers are to achieve corporate goals, they require well-developed financial markets where transfer of wealth from savers to borrowers is efficient in both pricing and operational cost.Explain the meaning of: informational efficiency of financial markets. Operational efficiency of financial markets. Explain the benefits that are enjoyed by investors because of existence of capital market in Rwanda All 3 question i have asked someone who doing accounting ,business or economics may answer Thank you !Suppose a firm estimates its WACC to be 10%. Should the WACC be used to evaluate all of its potential projects, even if they vary in risk? If not, what might be “reasonable” costs of capital for average-, high-, and low-risk projects? If Congress increased the personal tax rate on interest, dividends, and capital gains but simultaneously reduced the rate on corporate income, what effect would this have on the average company’s capital structure? If a firm goes from zero debt to successively higher levels of debt, why would you expect its stock price to rise first, then hit a peak, and then begin to decline?