Answer to Question #225854 in Finance for Anisha Radhika Kum

Question #225854

Toowoomba Computer Works (TCW) has employed a programmer towrite business programs for their clients. She writes a program which will be ideal to use to teach first-year accounting students the rudiments of electronic financial record-keeping. It sells for $200 per copy. TCW decides to give 100 copies free to the local university to be distributed to students in whatever way the course lecturer decides. The firm also gives the university a free site licence. Chapter One: Introducing the firm and its goals (a) Would this action tend to work against TCW’s avowed objective of wealth maximisation? (b) Is there an ethical problem here for any of the parties?

Expert's answer

a) Giving free copies wont act against TCW because the products act as gift to promote their product. If the university adopt the teaching program, this will create more revenue to TCW.

b)No ethical problem for TCW and university because the free samples are gifts.

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