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Suppose Kaplan (as the sole owner of Sky Air) is considering the purchase of a company jet for executive rather than for commercial use. The cost of the jet is $5,000,000. Its benefit to the company is expected to be $3,000,000 and its benefit to Kaplan personally is expected to be $1,500,000. Will Kaplan purchase the jet? Now suppose that Kaplan sells 30% of the company to Thyestean. Kaplan is again considering the purchase of a jet for executive use. Again, its cost is $5,000,000, its benefit to the company is expected to be $3,000,000, and its benefit to Kaplan personally is expected to be $1,500,000. Will Kaplan purchase the jet under these circumstances?

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Accounting Basics, Accounting

Category:- Accounting Basics
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