Author Question: Why is the search for new profitable projects so important? What will be an ideal ... (Read 48 times)

Medesa

  • Hero Member
  • *****
  • Posts: 507
Why is the search for new profitable projects so important?
 
  What will be an ideal response?

Question 2

Ride World has estimated the market value of its assets to be 1,250,000. What is the value of Ride World's common stock if it has 900,000 in liabilities, 50,000 in preferred stock, and 7,500 shares of common stock outstanding?
 
  What will be an ideal response?


Loise Hard

  • Sr. Member
  • ****
  • Posts: 340
Answer to Question 1

Without question it is easier to evaluate profitable projects or investments in fixed assets, a process referred to as
capital budgeting, than it is to find them. In competitive markets, generating ideas for profitable projects is extremely
difficult. The competition is brisk for new profitable projects, and once they have been uncovered, competitors
generally rush in, pushing down prices and profits. For this reason a firm must have a systematic strategy for
generating capital-budgeting projects based on these ideas. Without this flow of new projects and ideas, the firm
cannot grow or even survive for long. Instead, it will be forced to live off the profits from existing projects with limited
lives. So where do these ideas come from for new products, or for ways to improve existing products or make them
more profitable? The answer is from inside the firmfrom everywhere inside the firm, in fact.

Answer to Question 2

Stock price = (1,250,000 - 900,000 - 50,000 ) / 7,500 = 40



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Approximately 70% of expectant mothers report experiencing some symptoms of morning sickness during the first trimester of pregnancy.

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Did you know?

The Centers for Disease Control and Prevention has released reports detailing the deaths of infants (younger than 1 year of age) who died after being given cold and cough medications. This underscores the importance of educating parents that children younger than 2 years of age should never be given over-the-counter cold and cough medications without consulting their physicians.

Did you know?

Atropine was named after the Greek goddess Atropos, the oldest and ugliest of the three sisters known as the Fates, who controlled the destiny of men.

Did you know?

Urine turns bright yellow if larger than normal amounts of certain substances are consumed; one of these substances is asparagus.

For a complete list of videos, visit our video library