A capital improvement Betty could implement is leasing out a portion of her land to existing or future Alpaca owners. If Betty does not have a mortgage on her property, leasing out a portion of her land would generate immediate income. For instance, let’s say Betty owns five acres of land and decides to lease out one acre for a rental rate of $1,000.00 a month. This additional income would yield $12,000 annually. Betty could use a portion of this money to reinvest into her business while receiving tax-write offs; and could use the extra cash for reinvestment. Additionally, over the course of a long-term lease, Betty most likely will have to add infrastructure to the property to grow the operation. Some of the questions for Betty to consider concerning any capital improvements include: What key of improvements will need to be made? Who will pay for the improvements (Betty or lessee)? If lessee pays for the initial construction of the improvements, Betty should consider paying the lessee the depreciated value once the lease is terminated.
Pfizer is the world’s largest research based, pharmaceutical company. Its capital structure is designed to support the organizations debt, equity and market risk premium. Currently, Pfizer Inc. has three major core business segments: pharmaceutical, consumer health and animal health. In 2003, over 1 billion prescriptions were written for Pfizer medicines (Berardi, 2006) With all of their success and market dominance, one key challenge Pfizer experiences when protecting its assets is protecting its patents. For instance, bringing drugs successfully to the market starting with the ‘beakers in the lab” to obtaining patents can be very costly.
Thus, in order to ensure its success, Pfizer has a four phase process which consists of Phase 1: testing on healthy human populations; Phase 2: testing on diseased populations; Phase 3: applying drugs to a large patient population and pitted against competitors in the market and also approved by the Federal Drug Administration (FDA) during this phase; and Phase 4: introduces additional clinical trials to ensure the drugs are responding positively with the masses. If it were not for the patent protection, innovative R&D firms such as Pfizer would not exist.
Berardi, D.M. (2006, July). Detailed Case Study of Pfizer. Retrieved from http://voices.yahoo.com/detailed-case-study-pfizer-inc-41328.html
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