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effect of a higher or lower cost of capital on a firm’s long-term
financial decisions.  Analyze the use of capital budgeting techniques
in strategic financial management. Format your report consistent with
APA guidelines. Click the Assignment Files tab to submit your
assignment.
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FIN 486 Week 4 Team Assignment Case Study O’Grady
Apparel Company
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O’Grady Apparel Company was founded nearly 160 years ago when
an Irish merchant named Garrett O’Grady landed in Los Angeles with
an inventory of heavy canvas, which he hoped to sell for tents and
wagon covers to miners headed for the California goldfields. Instead,
he turned to the sale of harder-wearing clothing. Today, O’Grady
Apparel Company is a small manufacturer of fabrics and clothing
whose stock is traded in the OTC market. In 2015, the Los Angeles–
based company experienced sharp increases in both domestic and
European markets resulting in record earnings. Sales rose from $15.9
million in 2014 to $18.3 million in 2015 with earnings per share of
$3.28 and $3.84, respectively. European sales represented 29% of
total sales in 2015, up from 24% the year before and only 3% in 2010,
1 year after foreign operations were launched. Although foreign sales
represent nearly one-third of total sales, the growth in the domestic
market is expected to affect the company most markedly.
Management expects sales to surpass $21 million in 2016, and
earnings per share are expected to rise to $4.40. (Selected income
statement items are presented in Table 1.) Because of the recent
growth, Margaret Jennings, the corporate treasurer, is concerned that
available funds are not being used to their fullest potential. The