Absor case assignment.docx

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Department
Management (MGM)
Course
MGMD01H3
Professor
Tarun Dewan
Semester
Winter

Description
Abcor Industries is a subsidiary of Conglomerate Inc. They sell Plate-Making Equipment and Engraving Plate Material to different countries. The product ABCOR100is less expensive compare to AMCOR2000 at initial machine price, but the subsequent price per plate changed and ABCOR1000 is more expensive than ABCOR2000. Case 1 Client-Specific Parameters Salvage Value (new machine) $3,000 Salvage Value (old machine) $1,000 Use, Current (nb of plates per 990 year) Use, Annual Growth Rate 5.0% Time Horizon (in years, at least 2) 10 Discount Rate 15.0% The bid for machine price is $12000 The bid for price per plateis $1.58 Total buyer DCF is $15963 Total seller DCF is $15963 Elasticity of Demand is 1.67 Due the buyer will benefit from high plate- purchasing volume. Case 2 (Q = 250) Client-Specific Parameters Salvage Value (new machine) $3,000 Salvage Value (old machine) $3,000 Use, Current (nb of plates per 250 year) Use, Annual Growth Rate 11.0% Time Horizon (in years, at least 2) 5 Discount Rate 20.0% The bid for machine price is $6697 The bid for price per plateis $0.6 T
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