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sattari [20]
3 years ago
8

Harlan Bikes wants to close an unprofitable division with an expensive mortgage, high advertising costs, and high raw material c

osts. Harlan estimates annual savings of $450,000 if it closes the division versus an annual loss of $235,000 if it keeps it. How do the quantitative factors involved in this decision differ from the qualitative factors?
Business
1 answer:
Rudiy273 years ago
7 0

Answer:

Quantitatively, Harlan Bikes is justified in deciding to close the department, but there are other qualitative factors that need to be considered which may result in the company loosing much more that they can save if the department is closed, such as for example a decrease in employee morale, a negative signalling effect to other stakeholders, a drop in sales in related products etc.

Explanation:

A decrease in employee morale can result especially if workers  in other departments are no-longer sure about their future in the company, resulting from fears of their departments being closed. This can negatively affect productivity resulting in lower profits in other department.

A negative signalling effect means that other stakeholders such as investors and creditors may start questioning managements ability to profitably run the business, and the company will be perceived as more risky. Cost of debt and cost of equity capital for example, may go up, due to this higher perceived risk, and  which may reduce the number of positive net present value projects that the company can undertake due to an increase in cost of capital.

If the company carries related products in other departments, it may also see a drop in sales in those sales, which will effectively reduced the savings that are estimated  to be gained from closing the division.

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Answer:

free rider

False

Explanation:

✓Gilberto loves watching Downton Abbey on his local public TV station, but he never sends any money to support the station during its fundraising drives. Economists would call Gilberto ?

Answer:Free rider

Free rider can be regarded as a kind of market failure, this usually take place whenever people are enjoying the public resources, as well as services expect others to pay but himself doesn't pay or there is underpay.

✓The government cannot solve the problem caused by people like Gilberto?

Answer:TRUE.

The government cannot solve the problem since, it's local public TV station. The only way government can help is to pay and sponsor the show which can be achieved by tax revenue that government is collecting from the public.

✓The private market can solve this problem by asking people to send in $1 every time they watch Downton Abbey.

Answer: FALSE

The suggested ways by which the private market can help is to add "Commercial" into the program show then make people to watch, then through that commercial money will be generated.

3 0
3 years ago
Hamilton company’s 8 percent coupon rate, quarterly payment, $1,000 par value bond, which matures in 20 years, currently sells a
aliya0001 [1]
The correct answer is the firm's component cost of debt for purposes of calculating the wacc is  7.32%. 
4 0
3 years ago
Which of the following deals with cost-benefit analysis?
lana66690 [7]
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8 0
3 years ago
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Quentin operates an ice cream franchise which has shops throughout the United States. CoolCream Co., the franchisor, supplies th
Masja [62]

Answer:

C. manufacturing or processing-plant arrangement.

Explanation:

According to my research on the different types of relationships between companies and their manufacturers, I can say that based on the information provided within the question this relationship is known as a manufacturing or processing-plant arrangement. Which is basically (liked described in the question) when a franchiser provides the individual stores with the ingredients necessary to run the store.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

6 0
3 years ago
What does it mean to say​ that, at an exchange rate of 1 USD​ = 40 ​INR, the U.S. dollar is undervalued and the Indian rupee is
GenaCL600 [577]

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The US dollar is worth more value than INR.

Explanation:

The US dollar is worth more value than INR under flexible exchange rate system, quantity of dollar supplied exeed the quantity of dollar demanded. There are multiple factors which affect the valuation of currency. One of the factor is purchasing power parity, as it show the strength of domestic economy. Inflation is another factor affecting the currency of the nation, higher inflation rate lead the value of currency go down.

7 0
3 years ago
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