You Make the Call-Situation 2

question 67

Essay

You Make the Call-Situation 2
Harrison Stevens, second-generation president of a family owned heating and air conditioning business, was concerned about his 19-year-old son, Barry, who worked as a full-time employee in the firm. Although Barry had made it through high school, he had not distinguished himself as a student or shown interest in further education. He was somewhat indifferent in his attitude toward his work, although he did reasonably-or at least minimally-satisfactory work. His father saw Barry as immature and more interested in riding motorcycles than in building a business.
Stevens wanted to provide his son with an opportunity for personal development. As he saw it, the process should begin with learning to work hard. If Barry liked the work and showed promise, he might eventually be groomed to take over the business. His father also held a faint hope that hard work might eventually inspire him to get a college education.
In trying to achieve these goals, Stevens sensed two problems. The first problem was that Barry obviously lacked proper motivation. The second problem related to his supervision. Supervisors seemed reluctant to be exacting in their demands on Barry. Possibly because they feared antagonizing the boss by being too hard on his son, they allowed Barry to get by with marginal performance.

Understand how the market value of assets is determined by future earnings.

Grasp the essential conditions and considerations for investments to be financially profitable.

Calculate the present value of future cash flows at different interest rates.

Understand the impact of interest rate changes on the present value of future cash flows.

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Definitions:

Obligee

A contractual party who agreed to receive something from the other party.

Parol Evidence Rule

A legal principle that prevents parties to a written contract from presenting extrinsic evidence of terms that would contradict, modify, or add to the written agreement.

Parol Evidence Rule

A legal principle that prevents parties in a contract dispute from presenting evidence of prior or contemporaneous agreements that would contradict the written terms of the contract.

Parol Evidence Rule

A legal principle that prevents parties in a dispute from presenting evidence of prior or contemporaneous agreements that contradict or modify the written terms of a final contract.