The Noranda Board of Directors is considering four major capital budgeting proposals: development of a new mine, a mine shaft extension, purchase of an existing pulp and paper mill and purchase and installation of a continuous casting mill. A key issue is whether to use one overall cost of capital for the company or individual hurdle rates for each division.
President and CEO of Finning Tractor, has seen the earnings of the company drop below profitable levels because of a deep recession. Several restraint measures were instigated with little apparent impact. The case takes place at the point where a decision is impending on dividend policy with issues ranging from effect on stock price to the fact that the two majority shareholders may be adverse to taking a cut in the over $1.5 million in dividend income they were receiving annually.
A minority shareholder in a new operation has been offered a sum of money by the majority shareholder to buy up his shares. The question is whether or not the price offered is fair, in light of the fact that the market for these new golf clubs is highly unpredictable and the production costs are not truly representative of the actual amounts that will be required.