Midwest Subcontracting, Inc.
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Authors
Upton, Thomas L.
Issue Date
1974-07
Volume
Issue
Type
Thesis
Language
en_US
Keywords
Business--Case Study
Alternative Title
Abstract
In mid-1974, Mr. George Anderson, President of Midwest Subcontracting, Inc., was reviewing his major equipment acquisitions and their relative financing costs. Midwest Subcontracting is a medium-sized excavating and general contracting firm located in a major metropolitan city. | During the past year and a half, Midwest had been steadily replacing many of its heavy trucks, road graders, and other related heavy equipment. Simultaneously, interest rates had been steadily climbing in response to governmental efforts to control current inflationary trends. By June of 1974, prime interest rates had climbed to a new historical high of 11.5% (See Exhibit 1). Banks and other financial institutions normally required an additional 2% over prime when dealing with firms of Midwest's size and general type. | Midwest's Long-Term Debt for Equipment had grown to $389,000 by early June. Tills amount could be paid-off without penalty for $329,000 while replacement costs for this same equipment were estimated at $465,000. The market for used equipment had been appreciating rapidly in step with steadily rising prices for new equipment. A recent appraisal of Midwest's equipment estimated a current resale value of $379,000 for its financed portion.
Description
Citation
Publisher
Creighton University
License
A non-exclusive distribution right is granted to Creighton University and to ProQuest following the publishing model selected above.