Supershirtco Plans to Open a New Factory and Is Looking

question 19

Short Answer

Supershirtco plans to open a new factory and is looking for a suitable location. They have narrowed their choice down to three locations, Lima, Peru; Rome, Italy; and Nome, Alaska. They have defined four factors and have assigned weights to these factors as follows: wage rates (60), construction costs (20), logistics (10), and climate (10). They then rated the three locations for the four factors, using a scale of one to five. Their ratings are as follows:

(a)Calculate the scores for each location.
(b)According to the model which location should they choose?

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Definitions:

Standby Fee

Amount paid to underwriter participating in standby underwriting agreement.

Standby Underwriting Agreement

A standby underwriting agreement involves a commitment by an underwriter to purchase any unsold shares in a public offering, ensuring the issuer raises the intended amount of capital.

Underwriter's Buying Price

The price at which an underwriter purchases securities from the issuer to resell in a public offering.

Oversubscription Privilege

Allows shareholders to purchase unsubscribed shares in a rights offering at the subscription price.