UNDERSTANDING BUSINESS
12th Edition
ISBN: 9781264161881
Author: Nickels
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 5.2, Problem 1MED
Summary Introduction
To determine: Consequences of the decision of whether bid should be accepted or not.
Case summary:
20 percent too low bid is received from a sub contractor. This loss could put the sub-contractor out of the business but it can also improve the chances to win the project of big shopping centre. The partners want to take the bid and let the sub-contractor suffer the loss.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
If accepting risk is part of being an entrepreneur or running a business, shouldthe government, taxpayers, or any other entity ever bail out a company thattook risks and failed? Explain your answer
A CEO has placed you in charge of a new investment opportunity to borrow $5 billion dollars to create a new subsidiary of MCI called MillerCare Insurance.
Estimates indicate that in seven years, MillerCare Insurance and its assets will be valued at $8 billion. The best offer for the loan sits at 12 percent.
Mr. Miller instructed you to provide guidance to the new insurance firm, if indeed you decide to accept the loan package. How might you advise the top management of the insurance firm in regard to:
How the Law of Diminishing Returns impacts the insurance market
The dangers of
Moral hazard
Adverse selection
What is the cheapest source of funds? When all other sources turn down your request for funding, what source is most likely to say yes? Why is this the case? Is the entrepreneur exploiting a personal relationship with this potential source of capital? What are the consequences of using this source of capital if the business goes bankrupt?
Chapter 5 Solutions
UNDERSTANDING BUSINESS
Ch. 5.1 - Prob. 5.1AQCh. 5.1 - Prob. 5.1BQCh. 5.1 - Prob. 1TPCh. 5.1 - Prob. 2TPCh. 5.2 - Prob. 5.2AQCh. 5.2 - Prob. 1MEDCh. 5.2 - Prob. 3TPCh. 5.2 - Prob. 4TPCh. 5.3 - Prob. 5.3AQCh. 5.3 - Prob. 5TP
Ch. 5.3 - Prob. 6TPCh. 5.3 - Prob. 7TPCh. 5.3 - Prob. 8TPCh. 5.4 - Prob. 5.4AQCh. 5.5 - Prob. 5.5AQCh. 5.5 - Prob. 5.5BQCh. 5.5 - Prob. 5.5CQCh. 5.6 - Prob. 9TPCh. 5.6 - Prob. 10TPCh. 5.6 - Prob. 11TPCh. 5 - Prob. 1CECh. 5 - Prob. 2CECh. 5 - Prob. 3CECh. 5 - Prob. 4CECh. 5 - Prob. 1CTCh. 5 - Prob. 2CTCh. 5 - Prob. 3CTCh. 5 - Prob. 4CTCh. 5 - Prob. 1DCSCh. 5 - Prob. 2DCSCh. 5 - Prob. 3DCSCh. 5 - Prob. 4DCSCh. 5 - Prob. 5DCSCh. 5 - Prob. 1PPTCh. 5 - Prob. 2PPTCh. 5 - Prob. 1VCCh. 5 - Prob. 2VCCh. 5 - Prob. 3VC
Knowledge Booster
Similar questions
- What are some common legal issues that businesses face, such as contract disputes, product liability claims, and employment lawsuits? How can you minimize your risk of being sued and protect your assets in these situations?arrow_forwardYou meet with an insurance agent to buy a life insurance policy covering your wife and naming yourself as the beneficiary. You complete an application and a questioner about your health and living habits and give $100 to the insurance company? Can you assume that you have a valid contract? Why or why not?arrow_forwardYou own a small company that developed software for organizing and playing music on mobile devices and computers. Your software contains a number of features that you have patented and the future looks bright. However, you have discovered something troubling. It appears that a number of the patented features were copied in similar software developed by Music 4 All, a huge software company with annual sales in excess of $1 billion. You are distressed. Music 4 All has appeared to have stolen your ideas. Worse yet, that company has the brand recognition and a marketing budget that far exceeds yours, which positions it to steal the market and possibly drive you out of business. You decide to sue Music 4 All for patent infringement. With attorney’s fees and other expenses, the cost of going to trial – win or lose – is expected to cost you $1 million. You and your attorney feel you have 60% chance of winning the case, which would award your $5 million in damages. If you lose the…arrow_forward
- In class we discussed the "Assumption of Risk' doctrine. It can be argued that this doctrine promotes economic efficiency because it requires businesses to assume the risk of operating it allows people to engage in activities that would otherwise be too risky for businesses to offer O it assumes that the marginal benefit of the risk is equal to the marginal cost of the risk it requires businesses to assume the cost of injuriesarrow_forwardOne of the disadvantages of owning a corporation is that Multiple Choice O you will likely experience personality conflicts or other disagreements among partners. you must publicly disclose financial information. you will need discipline, putting the company's needs before your own desires. may have limited financial resources and few fringe benefits. creditors will not be able to hold you personally responsible for the corporation's debts.arrow_forwardSuppose that managers of a corporation approve corporate donations to a charity in the local community. How might a stakeholder proponent analyze the ethics of this donation?arrow_forward
- A small catering business in your city is for sale for $250,000. The company specializes in business luncheons and small social events. The owner has been running the business for four years from her home but is expecting her first child and wants to sell. You will need outside investors to help you purchase the business. Develop questions to ask the owner about the business and its prospects, as well as a list of documents you want to see. What other types of information would you need before making a decision to buy this company? Summarize your findings in a memo to a potential investor that explains the appeal of the business for you and how you plan to investigate the feasibility of the purchase.arrow_forwardMy business idea is a coffee shoparrow_forwardThe text describes three ways to restore solvency to the Social Security trust fund. Which of these do you favor and why? Would you support means testing of Social Security beneficiaries? Why or why not? What suggestions would you offer to encourage people to save privately for retirement? What barriers exist that affect people’s retirement savings, and how would your ideas address those barriers?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,