| Course | MT480 Corporate Finance |
|---|---|
| Unit | Unit 1 |
| Paper type | Discussion board post |
| Length | About 420 words, 2 pages double-spaced |
| Format | APA 7 discussion post |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT480 Unit 1
The Winter Contract Is Worth Keeping: An MT480 Unit 1 Discussion Post on Share Price and Customer Promises
MT480 · Unit 1 Discussion Board Post
Posted by [Student Name]
Brandywine Hollow Mushrooms, its customer, its figures and the classmates are composite; the sources cited are real.
Initial Post
My example is Brandywine Hollow Mushrooms, a composite grower near Avondale, Pennsylvania, where I worked in purchasing. The company promised a regional grocery chain fixed-price winter volume. Then natural gas prices, which heat the growing rooms and pasteurize the compost, jumped. Idling two growing rooms and short-shipping the chain for fourteen weeks would have saved about $2.6 million.
The program itself earns about $4.1 million a year in margin. Our sales director put the chance of renewal at about 90 percent if we delivered and 40 percent if we did not. At a 10 percent discount rate, five years of that margin is worth about $15.54 million, so a 50-point drop in renewal odds costs about half of it, $7.77 million. Honoring the contract wins by about $5.17 million.
Saving $2.6 million this winter would have put about $7.77 million of future margin at risk.
So why was this a debate at all? Because the general manager's bonus rode on quarterly gross margin. Graham et al. (2005) polled hundreds of finance chiefs, and a majority said they would give up real value to hit a quarter's earnings number, which is the conflict our bonus created. Maximizing shareholder value, properly measured over the relationship's life, pointed the same way as serving the customer.
Has anyone seen an incentive plan push a manager against the long-run value of the firm?
Reply to Tamara
Tamara, your example of the airline that kept a route open at a loss fits the same arithmetic. If the route feeds connecting passengers, its value is not the route's own margin but the network revenue it protects. I would ask what share of its passengers connect, since that figure decides whether keeping it open serves shareholders or only looks generous.
Reply to Devon
Devon, your point that customers are only valuable if they pay is fair, and it applies here too. If the chain had been unprofitable, short-shipping might have been the right choice. The test is the present value of the relationship, not loyalty for its own sake. Ross et al. (2022) describe the financial manager's job as making the owners' shares worth as much as possible today, which is exactly the calculation both of our examples call for.
References
Graham, J. R., Harvey, C. R., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1-3), 3-73. https://doi.org/10.1016/j.jacceco.2005.01.002
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2022). Fundamentals of corporate finance (13th ed.). McGraw Hill.
Reading the MT 480 Unit 1 instructions
MT480's opening board asks whether maximizing shareholder value conflicts with serving customers or other stakeholders, using a real or composite case. Describe the decision briefly and put numbers on both sides: what the short-term choice saves and what the long-term relationship is worth. Present value is the natural tool, even in a discussion post. Name the time horizon on which the conflict appears, since many apparent conflicts exist only over a quarter. Bring in one source on how managers actually behave, such as research on earnings pressure, and connect it to incentives. End with a question about incentive plans or time horizons. About 320 words for the post plus two replies is typical. Replies should apply the same valuation test to classmates' cases, agreeing or disagreeing with reasons rather than simply affirming.
How the MT 480 Unit 1 example is put together
Brandywine Hollow's post sets the scene in two sentences: a fixed-price winter contract and a jump in gas prices. The saving from short-shipping comes next, then the program's annual margin and the renewal odds under each choice. The present value of five years of margin and the half lost to a broken promise follow, under a highlighted line comparing $2.6 million saved with $7.77 million at risk. The post then explains the debate itself through the manager's quarterly bonus, with Graham, Harvey and Rajgopal's survey of executives willing to sacrifice value for an earnings target. It asks classmates about incentive plans that push against long-run value. One reply tests an airline route by its network value; the other accepts that unprofitable customers need not be kept, citing Ross, Westerfield and Jordan's statement of the financial manager's goal.
MT480 Unit 1 rubric: what earns full points
Opening finance posts earn marks by valuing both sides of a decision. Instructors credit a case where the short-term saving and the long-term value are both stated in dollars, because the course treats shareholder value as a present value, not a quarter's profit. Naming the time horizon on which the conflict appears shows the key insight of the unit. Connecting the conflict to incentives, such as bonuses on quarterly results, is often rewarded as an introduction to agency problems. Research on managerial behavior should support a specific claim. Ending on employers' bonus plans gives the thread somewhere to go, and responses score by running the same valuation on a classmate's case and adding one consideration it missed. Two sources, one textbook and one research article, are the usual expectation.
Common MT480 Unit 1 mistakes, and how to avoid them
The commonest Unit 1 weakness is arguing in general terms that companies should care about customers, with no numbers. Another is equating shareholder value with this quarter's earnings, which makes the conflict look larger than it is. Students often omit the renewal odds or other probabilities, so the long-term value cannot be estimated. Incentives are rarely mentioned, although they usually explain why a value-destroying choice gets considered. Replies tend to agree with every classmate. Before posting, write the dollar value of each choice side by side, including a discount rate and a horizon. If you cannot estimate one side, say what you would need to know. Then ask who in the company would be rewarded for the short-term choice, because that is often the most revealing sentence in the post.
Get an MT480 Unit 1 example written to your instructions
Share the Unit 1 prompt as your section wrote it, the discussion rubric and any reply requirements. A custom post can argue from your own workplace or from a composite firm, and it prices both sides of the tension before taking a position. Your first custom sample is free, and it usually comes back within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT480 Unit 1 questions, answered
Is maximizing share price the same as maximizing profit?
Not in corporate finance. Profit is one period's accounting figure, while share price reflects the expected size, timing and risk of every future cash flow. A manager can raise this quarter's profit by deferring maintenance or short-shipping a loyal customer and still lower the value of the firm. The sample post builds its whole argument on that distinction, which later units formalize through discounting.
Where did the renewal probabilities come from?
They are stated as estimates, the kind a sales director might offer, and the post labels them that way. What makes them usable is the break-even check: honoring the contract pays off as long as delivering raises the renewal odds by more than about 16.7 points. A reader who doubts the 90 and 40 can test any other pair against that threshold in seconds.
Can my post use a company I have never worked for?
Yes. Many students choose a public company from the news, such as an airline that kept thin routes open during a downturn, or a composite like the grower in the sample. Your post can draw on any case you can describe accurately, provided both sides of the tension carry a number and the source of each number is clear to a reader.
Where can I find a free MT480 Unit 1 sample paper?
This page holds the complete MT480 Unit 1 post valuing a composite mushroom grower's winter contract against short-term savings, with two replies.
How is the relationship valued in the MT480 Unit 1 sample?
Five years of $4.1 million margin at 10 percent is worth $15.54 million, and a 50-point drop in renewal odds puts about half of it, $7.77 million, at risk.