Problem:
As an investor in EasternSemiconductor Corporation, what do you think of the following statements? Justify your opinion.
The president of Eastern Semiconductor Corporation (ESC) stated in the company's Annual Report to Shareholders that ESC's goal is to increase the value of our common shareholder's equity. Later in the report, the following announcements were made:
1. The company contributed $1.5 million dollars to the symphony orchestra in the company's headquarters city.
2. The company is spending $500 million to open a new plant and expand operations in China. No profits will be produced by the Chinese operation for 4 years, so earnings will be depressed during this period verses what they would have been had the decision not been made to expand in that market.