Discuss the importance of matter of required attention plan

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Question - Lockdown Co is a large company and its shares being listed and officially traded on a major stock exchange. In recent years, the board of Lockdown Co has established a matter of required attention (MRA) plan to discuss the impact of Covid-19 on the company performance and share price.

Lockdown Co is appraising an investment project listed in the MRA, which it hopes will boost its performance and enhance the damage of share price created by Corona virus.

The project will cost $20m, payable in full at the start of the first year of operation.

This project is expected to generate after tax cash flow of 2.8m per year forever.

Financing options

- $20m new issue of common equity with 10% issuance cost and cost of equity is 15%.

- $20m issue of 30-year bonds with 2% issuance cost and cost of debt is 10%.

Required - Discuss the importance of a matter of required attention (MRA) plan established by board of director in the context of stakeholder theory.

Reference no: EM132824616

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