COMFORT NOW LA
Required
You have been hired by Nationwide Horizon’s board of directors to help their attorney (and them)
evaluate the claims in the lawsuit and determine whether the management team made the right decision.
You have been asked to consider the following specific questions in preparing a report: (Use the
guidelines for preparing a report on the course website.)
You remember from your Business School days the following concepts that you think might be useful
here:
a. adjusting data for inflation (macroeconomics LDC concept 1)
b. marginal cost vs. average cost (microeconomics LDC concept 6)
c. opportunity cost vs. accounting cost (microeconomics LDC concept 1)
d. present value (financial accounting LDC concept 9)
e. duty to mitigate damages (business law LDC concept 5)
f. compensatory and punitive damages (business law LDC concept 9)
TABLE 1
Sales
(Tons)
Average
Real
Price/Ton
($000)
Nominal
Price
($000)
Nominal
Revenue
($000)
Mfg. Rep’s
Commission
Rate
Total Cost
($000)
Earnings
before Tax
($000)
2001 2h 0 0 0 0 5% 129.840 -129.840
2002 1h 75 2.004 3.253 243.975 5% 251.454 -7.479
2002 2h 100 1.997 3.269 326.903 5% 309.175 17.728
2003 1h 150 2.004 3.315 497.280 5% 425.488 71.792
2003 2h 175 2.004 3.364 588.618 5% 492.402 96.216
2004 1h 185 2.004 3.423 633.271 5% 541.866 91.405
2004 2h 200 2.006 3.482 696.312 5% 605.633 90.680
2005 1h 225 2.001 3.535 795.292 5% 727.298 67.994
2005 2h 275 2.002 3.554 977.303 6% 988.973 -11.670
2006 1h 285 2.003 3.583 1021.067 6% 1042.133 -21.065
