University Of Central Florida Operations And Supply Chain Management Assignment Help - stock price change?

Question - BW P intends to purchase a machine that will result in a major improvement in product quality along
with a small increase in manufacturing efficiency. The machine will cost $1 million, which will be
borrowed at 9%. The quality improvement is expected to have a significant impact on BW P’s
competitive position. Indeed, management expects sales to increase by 5% in spite of a planned 10%
price increase. The efficiency improvement combined with the price increase will result in variable
costs of 36% of revenue. Fixed cost, however, will rise by 19%.
a. Compute BW P’s, new contribution, contribution margin, EAT, DOL and EPS if it purchases the new
machine.
b. If all of BWP’s projections come to pass, how will stock ...Read More price be influenced? What factors should be
considered in estimating a stock price change? ...Read Less

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