View the step-by-step solution to:

On Tuesday software giant Amcott posted a year-end operating loss of $3.5 million. Reportedly, $1.7 million of the loss stemmed from its foreign...

On Tuesday software giant Amcott posted a year-end

operating loss of $3.5 million. Reportedly, $1.7 million

of the loss stemmed from its foreign language

division.

With short-term interest rates at 7 percent,

Amcott decided to use $20 million of its retained

earnings to purchase three-year rights to Magicword,

a software package that converts generic word processor

files saved as French text into English. First-year

sales revenue from the software was $7 million, but

thereafter sales were halted pending a copyright

infringement suit filed by Foreign, Inc. Amcott lost

the suit and paid damages of $1.7 million. Industry

insiders say that the copyright violation pertained to

"a very small component of Magicword."

Ralph, the Amcott manager who was fired over the

incident, was quoted as saying, "I'm a scapegoat for

the attorneys [at Amcott] who didn't do their homework

before buying the rights to Magicword. I projected

annual sales of $7 million per year for three years. My sales forecasts were right on target."

Do you know why Ralph was fired?1

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question