Question

ABC Manufacturing issues a $100,000 face value bond at a discount of $92,788, 5-year maturity, 10% interest paid annually, the yield rate of interest is 10%.
Should ABC Manufacturing accept the $92,788 for that $100,000 bond? do you agree? If you do not agree, explain the reasons why you think they would not accept this bond. In business there are many factors to consider besides if I take action A then I will make this much money.  What would those factors be? Some of these are not necessarily covered in the text book, but they are part of reality and we have to consider this; it's called life.

Answer 1

In businesses there are many circumstances where the business decision is not affected by only financial aspect of it. The non-financial aspect of it also has to be considered. For example when a company is doing business in a certain region it as to make sure that it is not in conflict with the local people beliefs or customs because people are very sensitive to issues which goes against their religious belief and companies have to make sure that their approach is ethical and justifiable. Again, environment concern is something that is very important, industries have to consider seriously as to how their operations are going to impact the environment and take action to minimize the impact. The companies also have to focus on creating value for other stakeholders like civil society, government and people who are in the vicinity of the operation.