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Using the mini case information, write a 250-300-words report presenting potential ethical issues that may arise from expanding into other related fields. In your discussion, proactively strategize about possible expansion by explaining opportunities to promote ethical standards within your organization.
M I N I C A S E
Your employer, a mid-sized human resources management company, is considering expansion into related fields, including the acquisition of Temp Force Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporary heavy workloads. Your employer is also considering the purchase of a Biggerstaff & Biggerstaff (B&B), a privately held company owned by two brothers, each with 5 million shares of stock. B&B currently has free cash flow of $24 million, which is expected to grow at a constant rate of 5%. B&B’s financial statements report marketable securities of $100 million, debt of $200 million, and preferred stock of $50 million.

Sagot :

Answer:

Temp Force required rate of return is 13%

The shareholders of B&B will have rights of dividend in the company's profit.

Explanation:

Temp Force company will require a rate of return based on the risk of the company. The beta factor determines the business risk of the company. For the Temp Force the beta factor is 1.2

Required rate of return of temp Force;

r = Rf + (Rm - Rf) * beta

r = 7% + (12% -7%) * 1.2

r = 13%

B&B shareholders will have voting rights in the company and they are eligible for any dividends declared by the company. They will have rights to elect the director and attend the AGM and EOGM. These rights are given to shareholders to maintain good corporate governance in the company.