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project maximize firm value

SCENARIO:

Look at the excel attachment which is the one you completed for me Mr. Jain :) to this assignment and answer each question:

1. Does this project maximize firm value?
2. What will be the impact to the stock price?
3. How does this capital project fit with the strategic direction of the company?
4. Explain how capital projects maximize firm value.
5. Explain how major capital projects can impact a firm's stock market valuation and how they should fit with the strategic direction of the organization.

In light of this, you decide to email the CFO and VP of Strategic Planning in anticipation of their questions.

Attachments

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1. Does this project maximize firm value?

Yes as its NPV is positive which means that the project is earning more than its cost of capital and is maximizing the firm's value.

2. What will be the impact to the stock price?
The impact on stock price will be positive as the firm has selected the right project.

3. How does this capital project fit with the strategic direction of the company?

Various management consultants and thinkers have defined the process of strategy in various ways. Porter's model focused on defining a firm's strategy in terms of it's product/ market positioning. Building on Porter's notion of competitive advantage, the resource based view of strategy argues that the resources and capabilities of an organization can be a source of competitive advantage if they process certain characteristics ...

Solution Summary

The solution determines whether the project maximizes the firms value.

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