calculations used to determine the weighted average cost of capital (WACC). This SLP... calculates the WACC for my SLP company – McDonalds, discusses how those calculations were arrived at and briefly describes WACC and what investors use it for. COMPANY NAME: McDonalds Inc Balance sheet date: 31 DEC 07 Market values date: 1 SEP 08 SOURCE BOOK VALUE MARKET VALUE PROPORTIONS COST (%) PRODUCT (a) (b)...
1757 Words | 6 Pages
Chapter 9 Cost of Capital 1. What is the WACC? a. Weighted Average Cost of... Capital- most firms employ different types of capital, and because of their differences in risk, the difference securities have different required rates of return. Typically=debt, preferred stock and common equity. 2. What precautions must we take when measuring the WACC to use for capital budgeting decisions (future investment)? b. The company’s current and recent past book and market value structures...
898 Words | 3 Pages
OVERVIEW DCF in theory and in practice Unlevered vs. levered DCF SECTION 2: MODELING THE DCF Modeling unlevered free cash... flows Discounting to reflect stub year and mid-year adjustment Terminal value using growth in perpetuity approach Terminal value using exit multiple approach Calculating net debt Shares outstanding using the treasury stock method Modeling the weighted average cost of capital (WACC) Sensitivity analysis using data tables Modeling synergies ***************************** SAMPLE PAGES...
1400 Words | 7 Pages
or false. _F___ 1. The corporate valuation model cannot be used unless a company doesn't pay dividends. _T___ 2. Free... cash flows should be discounted at the firm's weighted average cost of capital to find the value of its operations. _F___ 3. Value-based management focuses on sales growth, profitability, capital requirements, the weighted average cost of capital, and the dividend growth rate. _F___ 4. Two important issues in corporate governance are (1) the rules that cover the...
1499 Words | 7 Pages
Cost of Capital at Ameritrade What factors should Ameritrade management consider when evaluating the proposed advertising... program and technology upgrades? Why? Mr. Ricketts believes that his role as CEO is to maximize shareholder value by accepting any project whose expected return on investment is greater than the cost of capital. Therefore, the main factors that Ameritrade management should consider are the expected return on investment for the project, and how this compares to the project’s...
1434 Words | 5 Pages
The Cost of Capital in Multinational Firms Monique N. Mixon University of Maryland University... College FIN 630, 04 November 2012 Turnitin.com=_________ ABSTRACT This paper examines the cost of capital for multinational firms and determines that the multinational firm should use the weighted average cost of capital (WACC) to evaluate international and domestic investment decisions and to magistrate the enactment of subsidiaries domestically and internationally....
779 Words | 3 Pages
WACC Weighted Average Cost of Capital Formula The WACC Weighted Average... Cost of Capital formula is complex, and can be broken into several components. The individual component costs are provided in the following sections. WACC Weighted Average Cost of Capital Variables V=Firm Total Value (Debt + Preferred Shares + Common Equity + Retained Earnings) Md=Market Value of Debt Mp=Market Value of Preferred Shares Mc=Market Value of Common Equity Mr=Market Value of Retained Earnings K=Current...
565 Words | 3 Pages
financial strategy is investing in projects that increase shareholder value. Marriott uses the discounted cash-flow... techniques to evaluate potential investments that falls in line with Marriott’s growth objectives. It is beneficial because it considers the present time value of investment. By comparing to its hurdle rates, Marriott concentrates on the projects which will bring potential return. The projects which increase shareholder value can result in profitable and competitive advantage. The third...
1963 Words | 6 Pages
and TSE want to negotiate a merger deal? Yeats is considering this merger deal because it would offer a succession plan for the company as TSE is a much... larger company that can offer Yeats financial stability without having Yeats to identify new capital (debt and equity) on its own to fund the Widening Gyre Program (an advanced hydraulic-controls system). Yeats needs additional funding in order to continue the R&D of the Widening Gyre Program. Also, TSE has the expertise of mass manufacturing that...
1729 Words | 7 Pages
ogCost of capital First of all I would like to say the I wanted to calculate the cost of debt and cost of equity... but the information given in the statements are missing the items needed to calculate the cost of debt and the cost of equity but I would like to analyze the information related to this part The market capitalization already increased in year 2010to 7,016 million from the previous year which was 3,805 million in year2009.also we can see the share price started year2010 with equal...
1397 Words | 4 Pages
Q1: The Target Capital structure for Kaynat Manufacting is 50% common stock, 15% preferred stock, and 35% debt. If the cost of... common equity for the firm is 19.6%, the cost of preferred stock is 12.9% and the before tax cost of debt is 9.5% what is the weighted average cost of capital? The firm's tax rate is 35%. Answer: WACC = (50% x 19.6%) + (15% x 12.9%) + ( 35% x 9.5% x 65% = Q2: The following are the information of a company: |Type of capital |Book value (Tk) |Market...
670 Words | 3 Pages
Estimating the Cost of Capital: Survey and Synthesis Case 13 Teaching Notes Introduction “Each year in the US,... corporations undertake more than $500 billion in capital spending” (Bruner 184). This case presents a reasonably analyzed set of teaching notes describing how these financially sophisticated corporations estimate their capital costs. Understanding the estimation of capital costs helps identify the uncertainty of the cost-of-capital theory, sets a benchmark for cost-of-capital, helps...
1357 Words | 4 Pages
Marriott uses Weighted Average Cost of Capital (WACC) as the hurdle rate, and use it to discount the... appropriate cash flows when evaluate an investment project. Our goal is to determine the WACC at every division base on the information that the case has provided. First of all, we will determine the cost of debt, cost of equity and the capital structure for the whole company. Then we will compute for the tax rate, and calculate the WACC for the whole company. After this, we will determine the Risk-free...
2540 Words | 7 Pages
River WACC 5 Free Cash Flows of the Packaging Machine Investment 7 Appendices 7 i. Objectives This... report seeks to answer the following five questions about Star River Electronics Ltd.: 1. Assess the current financial health and recent financial performance of the company. What strengths and/or weaknesses would you highlight to Adeline Koh? 2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years...
1166 Words | 4 Pages
Cost of Capital questions and practice problems Questions 1. What does the WACC measure? 2. Which is easier... to calculate directly, the expected rate of return on the assets of a firm or the expected rate of return on the firm’s debt and equity? Assume you are an outsider to the firm. 3. Why are market-based weights important? 4. Why is the coupon rate of existing debt irrelevant for finding the cost of debt capital? 5. Under what assumptions can the WACC be...
1179 Words | 5 Pages
advertising, but is unsure of the appropriate cost of capital. Estimating the cost of capital... 1. Since we do not have the beta for Ameritrade, we need to find comparable firms for which we could compute the betas. There are several candidates in the case. Discuss which firms are most appropriate. Thus, the proportion of the revenue a firm earns from transactions and interest (brokerage activities) has something to do with the risk. Thus, to find the firms of comparable risks, we may take a look...
1029 Words | 5 Pages
Since we will need to estimate the discount rate any time the capital structure changes, neither WACC nor APV would be reliable alone.... Therefore, Ms. Zhang should use the combination of WACC and APV methods. As stated above, ACC will use the Leverage buy out (LBO) approach, which means that the debt to equity ratio of AirThread will not be the same from 2008 to 2012, so APV approach would be more suitable to valuate the cash flows between 2008 and 2012. After 2012, AirThread will de-lever to...
1228 Words | 6 Pages
1. What is the weighted average cost of capital for Marriot Corporation? Briefly outline the key... assumptions that you made in computing the WACC. 2. What is the cost of capital for the lodging and restaurant divisions of Marriot Corporation? Briefly outline the key assumptions that you made in computing the cost of capital and outline any limitations that are presented by your analysis. 3. If Marriot uses a single company-wide cost of capital for evaluating investment opportunities in each of its...
2056 Words | 5 Pages
Capital Budgeting Analysis Amanda Kocanda, DeUndre’ Rushon, HuongTran,& Morgan Gibreal MBA 612, Financial Strategy October 28, 2014... Bellevue University Abstract Within this paper, an overview of the general capital budgeting process and how it is implemented within organizations is defined and reported. Key terms related to capital budgeting are also defined. Risk analysis based on the Net Present Value (NPV) is performed on the salvage values before and after sales tax values...
1640 Words | 13 Pages
Free cash flow In corporate finance, free cash flow (FCF) is... cash flow available for distribution among all the securities holders of an organization. They include equity holders, debt holders, preferred stock holders, convertible security holders, and so on. G. Bennett Stewart - the "economic model of value holds that share prices are determined by just two things: the cash to be generated over the lifetime of a business and the risk of the cash receipts”. GSB (1990), “The Quest for Value”...
1468 Words | 6 Pages
2. TELETECH CORPORATION 1. How does Teletech Corporation currently use the hurdle rate? Currently Teletech uses a single hurdle rate... for both their Telecommunications Services and Products and Services divisions. The hurdle rate is the cost of capital based on an estimate of the corporation’s WACC. 2. Please estimate the segment WACCs for Teletech (see the worksheet in case Exhibit 1). As you do this, carefully note the points of judgment in the calculation. Corporate Telecommunications...
657 Words | 3 Pages
leadership, we will explain capital structure and determine weighted average cost of... capital (WACC) from the assumption provided by Mary Francis. Furthermore, we will show how WACC and Capital Structure can be leveraged to find out the viability of the capital project. Additionally, we will explain marginal cost of capital. To close, we will make a recommendation on the best approach to apply to project evaluation between capital structure and WACC Capital Structure Capital Structure refers to the...
1020 Words | 4 Pages
312 Value Creation: The Six DCF Pointers When trying to decide the value of a particular company, let’s say Apple for example,... it is crucial to understand what determines its investing value. Valuing a huge corporation is not simply taking a look at the balance sheet and income statement and figuring out what’s total assets and total liabilities. A discounted cash flow analysis is one of the main ways investors can value a company. The idea of the actual valuation is to project future cash flows...
1003 Words | 2 Pages
Corporation: The Cost of Capital (Abridged) Executive Summary: The case &quot;Marriott Corporation: The Cost... of Capital (Abridged)&quot; focuses on an ideal opportunity to review the capital asset pricing model and the weighted average cost of capital through calculation of the cost of capital for Marriott as a whole. Dan Cohrs is faced with making recommendations for the hurdle rates at Marriott Corporation and its three divisions utilizing CAPM and WACC. This case illustrates how to calculate...
2507 Words | 7 Pages
Cost of Capital Definition: cost of capital is the rate of return that a company must earn on its... project investments to maintain its market value and attract funds. The cost of capital to a company is the minimum rate of return that is must earn on its investments in order to satisfy the various categories of investors, who have made investments in the form of shares , debentures and loans. The cost of capital in operational terms refers to the discount rate that would be used in determining the...
1468 Words | 5 Pages
Ameritrade's Cost of Capital Harvard Case Study 1. What factors should Ameritrade management consider when evaluating... the proposed advertising program and technology upgrades? Why? One factor that is significant and pertinent to this case is determining the cost of capital that should be employed for Ameritrade. An appropriate discount rate is required to derive the net present value of the advertising program and technology upgrades. With that said, estimating future cash flows should...
808 Words | 3 Pages
and practical application of the weighted average cost of capital (WACC) begins. It presents evidence... on how some of the most financially complex companies and financial advisors estimated capital costs and focuses on the gaps found between theory and application. The approach taken in the paper differed from their predecessors in several various respects. Prior published information was solely based on written, closed-end surveys sent to a large number of firms, without a focused topic. The study...
1239 Words | 4 Pages
to Note on Sample Cash Flow Template. Question 1 (5 points) The project with the highest IRR is always the project with the... highest NPV. Your Answer | | Score | Explanation | True | | | | False | ✔ | 5.00 | Correct. Try now to sort this out in different contexts, | Total | | 5.00 / 5.00 | | Question Explanation This is all about the fundamental difference between IRR and NPV. Question 2 (10 points) Ann Arbor is considering offering public bus service for free. Setting up the...
1850 Words | 7 Pages
Case: Cost of Capital at Ameritrade 1 Introduction Ameritrade is formed in 1971, and is a pioneer in the deep-discount... brokerage sector. [A deep-discount broker is a broker that offers lower commissions than a discount broker, but also provides fewer services to clients. Such a broker usually will not provide anything beyond execution of stock and option trades, and will charge a flat fee regardless of the size of the trade] In march 1997, Ameritrade raised $22.5 million in an initial...
954 Words | 4 Pages
Capital Valuation Paper YOUR NAME COURSE Instructor NAME DATE Capital Valuation Paper A business... valuation of a company, especially one the size of Target, is a mystery but is often an integral part of planning, decision-making, strategic assessment, and maybe an equitable resolution to a touchy concern. Knowing what a business is worth and placing a value on it builds confidence so undervalue or overvalue of the business does not happen. Team C will perform a capital...
1499 Words | 6 Pages
subscriptions by a company to raise capital for the purpose of expansion. It is considered as a big issue for companies as an IPO does not... necessary guarantee the success of a company as it is merely a tool of raising capital while its costs of issuance and consecutive monitoring costs (due to diluted shareholdings of the company by public investors) are relatively higher than the cost of issuing corporate debt. Yet IPO is still a popular tool for infant firms due to the fact it creates strategic...
1802 Words | 5 Pages
Given the proposed financing plan, describe your approach (qualitatively) to value AirThread. Should Ms. Zhang use WACC, APV or some... combination thereof? Explain. (2 points) * From the statement of AirThread case, we know that American Cable Communication want to raise capital by Leveraged Buyout (LBO) approach. This means ACC will finance money though equity and debt to buy AirThread and pay the debt by the cash flows or assets of AirThread. * In another word, it’s a highly levered transaction...
1090 Words | 4 Pages
The Oceanic Corporation (Determining the Cost of Capital) Larry Stone wants to estimate the firm’s hurdle rate because it... is a benchmark for how well the company needs to do on a project in order to at least break even. The higher the hurdle rate, the riskier the project will have to be and the lower the hurdle rate is, the safer the project will be for a company. A company should strive for a financing mix that minimizes the hurdle rate and matches the assets being financed. If there...
872 Words | 3 Pages
Describe how value-added is calculated. To what extent are value added, cash flow, and... profit connected to a company’s sales performance? Throughout this essay I will be exploring how value added is calculated and to what extent value added, cash flow and profit are connected to a company’s sales performance. I will do this by introducing value added and the formulas in which they are calculated, mathematically and through accounting, the purpose why value added is calculated and the theory of...
1835 Words | 6 Pages
Case Study of Cost of Capital at Ameritrade 1-a How can the CAPM be used to estimate the cost of... capital for a real business investment decision? CAPM results can be compared to the best expected rate of return that investor can possibly earn in other investments with similar risks, which is the cost of capital. Under the CAPM, the market portfolio is a well-diversified, efficient portfolio representing the non-diversifiable risk in the economy. Therefore, investments have similar risk if they...
1337 Words | 4 Pages
In finance, the discounted cash flow (DCF) analysis is a method of valuing a project, company or asset using the concepts of time... value of money (Wikipedia, 2004). Three inputs are required to use the DCF, also called dividend-yield-plus-growth-rate approach, include: the current stock price, the current dividend, and the marginal investor’s expected dividend growth rate. The stock price and the dividend are east to obtain, but the expected growth rate is difficult to estimate (Ehrhardt & Brigham...
1052 Words | 3 Pages
Telus: The Cost of Capital Telus needs to calculate the cost of capital from the variety of data... given. The cost of capital is determined mostly by how the funds are used rather than where they were obtained from. It relies on the risk of investments Telus involves in, therefore, depending on cost of both equity of debt as described below. Also note that, even though the preferred shares are not attractive to issuers and may not get issued again, it is still on the company’s balance sheet and affect...
1178 Words | 4 Pages
Hurdle Rate Analysis Hurdle rates, the weighted cost of capital that projected cash... flows must exceed for initiatives to be considered, vary within Marriott Corporations due to their unique industry risk levels and capital structures. They use this number to determine which projects to accept, to adjust the rate at which the firm grows and as a measure for compensation within each business area, and as incentive compensation. Marriott Corporation as a firm has a beta of 0.572, the result of diversifying...
667 Words | 3 Pages
1. On one half a page review what does our traditional finance framework and the CAPM model, for example, have to say about risk? What is it?... How is it approached? The traditional finance framework uses discounted expected future cash flow to determine the NPV of the project. The amount of the opportunity cost is based on a relation between the risk and return of some sort of investment. People are rational and adverse to risk and need incentive to accept risk. The incentive in finance comes in...
1666 Words | 5 Pages
The role of cash flow information in discriminating between bankrupt and non-bankrupt companies remains a contentious issue. In a... number of literature reviews on bankruptcy prediction (e.g. Zavgren, 1983; Jones, 1987; Neill et al. 1991; Watson, 1996) the common view is that cash flow information does not contain significant incremental information content over accrual information in discriminating between bankrupt and non-bankrupt firms. (Divesh S. Sharma, Senior Lecturer, School of Accounting, Banking...
1675 Words | 5 Pages
Questions Case #5 – Marriott Corporation: The Cost of Capital 1. Are the four components of Marriott’s financial strategy... consistent with its growth objective? 2. How does Marriott use its estimate of its cost of capital? Does this make sense? 3. What is the weighted average cost of capital for Marriott Corporation? a. What risk free rate and risk premium did you use to calculate the cost of equity? b. How did you measure Marriott’s cost of debt? 4. If Marriott used a single corporate...
781 Words | 3 Pages
terminal value (TV) a material component of firm values? From the exhibit, we can find the PV of five years’... dividends is small part of the market price of the stock. In my opinion, we buy a stock then get dividend periodically, which like buy a bond. The coupon payment is dividend and the face value is terminal value. The bond value is determined by the terminal value mostly. So the stock price is also determined by terminal value. The concept of going concern can explain that Terminal value is often...
1092 Words | 4 Pages
organization’s debt, if any, and equity, using various capital valuation models. Complete the following in your paper: • Show calculations... that support your findings, including those involving rates of return. • Defend which valuation model best supports your findings. Capital Valuation Paper Capital Valuation Paper Berkshire Hathaway Inc. is an American...
1626 Words | 6 Pages
of 2009 the capital structure of the Emerson Electric Corporation (EMR) (measure in book and market values) appeared as follows:... Thousands of dollars Book Values Market values Short- term debt $1,312,000 $1,312,000 Long-term debt 11,880,000 11,880,000 Common equity 9,142,000 26,115,000 Total capital 22,334,000 39,307,000 What weights should Emerson use when computing the firm’s weighted average cost of capital? 3. Compute the cost of capital for the firm for the following: ...
2436 Words | 6 Pages
Marriott Case 1. What is the WACC for Marriott Corporation? Cost of Debt... Tax Rate We determined this number by taking income taxes paid/EBITDA = 175.9/398.9 = 44.1% Return on debt There are two clear components of debt: fixed and floating. In order to get the fixed debt rate we took the interest rates on fixed-rate government securities and added the premium...
1790 Words | 7 Pages
Question 2.2 – Accounting and Cash Flows: Why is it that the revenue and cost figures shown on a standard income... statement may not be representative of the actual cash inflows and outflows that occurred during a period? Financial Statements are prepared according to accrual rule of , according to which cost and revenue are recorded as they occur and not when they are actually received or paid. This is why cash flows during the year may be different from revenue and costs in income statements. Different...
804 Words | 3 Pages
Cash flow is the movement of money in and out of a business. It is of vital importance for a company continually monitoring and... controling its cash flow. A shortage of cash may lead to insolvency while an excess of cash is wasteful because it is not a productive asset. Therefore, various sources of finance should be combined to help maintain a sound record of cash flow. However, ‘The problem is not just to find the money but to find it from the right sources at the right price and at the right time...
1661 Words | 4 Pages
American firm, has 3 major lines of business: lodging, contract service and restaurants. Its growth objective is to remain a premier growth... company. The four components of its financial strategy are consistent with this growth objective for the reasons: Manage rather than own hotel assets: Marriott sold its hotel assets to limited partners to reduce assets and thus, it can increase ROA and thereby increase potential profitability. Invest in projects that increase shareholders’ value: the discounted...
807 Words | 3 Pages
CASH FLOW AND FINANCIAL PLANNING: A. ANALYZING A FIRM’S CASH FLOW THE STATEMENT OF... CASH FLOW “Cash flow, the lifeblood of the firm, is the primary ingredient in any financial valuation model.” - the summary of a firm’s cash flow over a given period, which uses the data from income statement, along with the beginning and end of period balance sheets. - allows the financial manager and other interested parties to analyze the firm’s cash flow - used to evaluate progress toward projected...
1375 Words | 6 Pages
Determining the Cost of Capital Can One Size Fit All? 1. Why do you think Larry Stone wants to... estimate the firm’s hurdle rate? Is it justifiable to use the firm’s weighted average cost of capital as the divisional cost of capital? Please explain. Larry wants to estimate the firm's hurdle rate because it would provide him with a standard with which to measure feasibility of future investment proposal. The firm had thus far been using a ‘gut feel’ approach and although most of...
1017 Words | 5 Pages
Corporation – The Cost of Capital Date : April 6, 2010 The Importance of the Cost of Capital... The cost of capital is important as it forms the basis for Marriott’s investing and financial decisions. By understanding and knowing the cost of capital, Marriott is able to select relevant investment projects for the company, determine incentive compensation, and repurchase undervalued shares when needed. The returns of a project were found by discounting the appropriate cash flows against the appropriate...
1102 Words | 3 Pages
and AirThread, do you think the acquisition is a good idea? Briefly explain your answer. Yes. First, American Cable Communication (ACC) and... AirThread could help each other compete in the industry that was moving more and more bundled service offerings. Second, the acquisition could help both companies expand into the business market. Third, ACC was in a unique position to add value to AirThread’s operations because the acquisition could save AirThread more than 20% in backhaul costs. The reasons...
1343 Words | 13 Pages
Capital Budgeting Analysis Project MBA 612 The General... Capital Budgeting Process and how it is implemented within Organizations The general capital budgeting process is the tool by which an organization determines its choice of investments through analyzing and evaluating its cash in and out flows. The capital budget process is vital to the organizations mere existence. Capital budgeting decisions can mean the difference...
1431 Words | 4 Pages
Capital budgeting (or investment appraisal) is the planning process used to determine whether an organization's long term... investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.[1] Many formal methods are used in capital budgeting, including the techniques such as * Accounting rate of return * Payback period * Net present value * Profitability...
1706 Words | 5 Pages
Discounted Cash Flow Techniques for Capital Project Evaluation A discounted cash flow... analysis is an important tool in capital budgeting as a means of evaluating proposed projects and comparing the growth potential of cash flows. Relevant incremental cash flows must be considered along with the costs of the investment itself in order to determine if the project is to be accepted or rejected. The considerations for acceptance or rejection of a project or slate of projects are the net present value, internal...
894 Words | 3 Pages
Capital Budgeting Scenarios Shannan Coleman FIN/486 September 23, 2012 Sal Sadiq Capital Budgeting Scenarios... Capital Budgeting: Proposal A – New Factory Proposal A is to build a new factory to decide if this would be a feasible move for the company they need to perform a net present value analysis. To do this they will only need to look at the incremental cash flows, which are as follows: 1. Initial investment of $10 million that will be the cost to build the new factory. 2. Sales...
872 Words | 4 Pages
What’s your real cost of capital? By James J. McNulty, Tony D. Yeh, William s. Schulze, and Michael H. Lubatkin Harvard... Business Review, October 2002 Issue of the article: valuing investment projects Number of pages: 12 Daniel Miravet Campos Part 1. Executive summary This article is fundamentally based on the exposition of a new method to calculate the cost of capital for a company (MCPM), to meet the inefficiencies of the current one (CAPM). In valuing any investment project or...
1307 Words | 4 Pages
includes FIN 571 Week 6 Furniture Store Recommendation Cash Per Forma Resource: The Guillermo Furniture Store Scenario or your own... organization, with the approval of your instructor, for this assignment Write a paper in no more than 2,100 words that analyzes Guillermo’s alternatives and make a recommendation of a financial decision. The paper must also include a justification for your recommendation. Create a pro forma cash flow budget for the organization for at least the next...
448 Words | 3 Pages
position of Teletech was to estimate the Weighted Average Cost of Capital (WACC) for both its... Telecommunications segment and its Products and Systems segment and then compare that to the firms corporate WACC. The WACC assesses the amount the risk that an average capital project undertaken by the firm contains. It is also the required rate of return the firm must end up paying in order to later generate funds, which can then be used as a benchmark to determine how profitable an investment is or may be...
1139 Words | 3 Pages
Week 4 Assignment Integrative Problem and Study Questions 1. Why is the capital-budgeting process so important?... Capital budgeting decisions involve investments requiring large cash outlays at the beginning of the life of the project and commit the firm to a particular course of action over a relatively long period of time. As such, they are costly and difficult to reverse, both because of: (1) their large cost and (2) the fact that they involve fixed assets, which cannot be liquidated...
984 Words | 4 Pages