AFM373 Lecture Notes - Lecture 7: Equity Premium Puzzle, Cash Flow, Maximum Capacity

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM373
• Professor: Alan Douglas

Document Summary

Fonderia di torino, situated in italy, was founded in 1912 by a naval engineer named benito. The company manufactured precision metal casting for use in automotive, aerospace, and construction equipment. Some of its products included crankshafts, transmissions, brake calipers, axles, wheels, and various steering-assembly parts. Fonderia di torino had a great reputation for quality products, which helped develop a good relationship with original-equipment manufacturers (oem) to the point that oems shared confidential market-demand information with fonderia di torino. In addition, fonderia di torino was able to acquire cheap loans from oems, which helped support fonderia di to(cid:396)i(cid:374)o"s (cid:272)apital e(cid:454)pa(cid:374)sio(cid:374). With (cid:1005) (cid:373)illio(cid:374), francesca cerini, managing director of fonderia di torino, was considering whether to purchase a vulcan mold-maker automated molding machine, which would replace an older machine. There had been other proposals regarding acquiring similar molding machines, which had been rejected by the board of directors.