One of the approaches for the Southern Company to comply with the Clean Air Act is to adopt fuel-switching technology. Do you think this strategic flexibility would have value to Southern Company’s shareholders? Why?
To find: Whether the strategy to adopt fuel switching would have any value to the southern company’s shareholders or not.
Explanation of Solution
Yes, this strategy or approach to abide by the clean Air act is to adopt the aspect fuel switching technology would add value to the southern company’s shareholders because the adoption of fuel switching technology might make the net present value of southern company positive.
Moreover, adopting new technology or machinery results in an increase in the firm’s value and consequently, it will increase the shareholder’s value.
Thus, a positive net present value shows that the value of the company’s shareholders has been maximized.
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Chapter 1 Solutions
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