The president of Easton Semiconductor Corporation made this statement in the com

Question

The president of Easton Semiconductor Corporation made this statement in the company's annual report:"ESC's primary goal is to increase the value of our common stockholders equity. later in the report the folllowing announcements were made: A ESC contributed 1.5 million to the symphony orchestra in bridgeport,connecticut, where it is headquartered. B. esc is spending 500 million to open a new plant and expand operations in china. no profits will be produced by the chinese operations for 4 years, so earning will be depressed during this period versus what they would have been had the decision not been made to expand in that market. Discuss how esc's stockholders might view each of these actions, and how the action might affect the stock price.

Explanation / Answer

Answer Details 1. since the company has invested in a new company which is in its head quartes city it may prove to b profitable for it bcoz the companyy may b well known there . so the stock holders equity will increase 2. for the second process since no profits will b produced so there may b chances for the share holder equity to fall down . 3.the stock holders may not take the third action positively as they should not have taken the stocks kept for emergencies for common stocks as these funds may prove to be very useful during crucial times ..

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