Kelly Industries Is Given the Opportunity to Raise $5 Million

question 47

Essay

Kelly Industries is given the opportunity to raise $5 million in debt through a local government subsidized program. While Kelly would be required to pay 12% on its debt issues,the Hampton County program sets the rate at 9%. If the debt issue expires in 4 years,calculate the NPV of this financing decision.

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Definitions:

Theory Y

Refers to a management style that is optimistic about employees, assuming they find work as natural as play and will be self-directed if the job is satisfying.

Industrial Revolution

A period of major industrialization from the late 18th to early 19th century that transformed mainly agricultural societies into industrialized and urban ones.

Company Towns

Historically, communities where practically all stores and housing are owned by the one company that is also the main employer.

Gilbreths

Refers to Frank and Lillian Gilbreth, pioneers in the field of industrial engineering, known for their studies in time and motion, and efforts to improve workplace efficiency.