Please use the following textbook in answering the questions:

Please use the following textbook in answering the questions:

Palepu, K.G. & Healy, P.M. (2008). Business Analysis and Valuation: Using Financial Statements: Using Financial Statement; Text and Cases (4th ed.). Cengage Learning.

The following questions pertain to the Anacomp case in the Palepu text (Additional Cases section), pages 27-49

2. (25 points) Evaluate Anacomp’s business new product development strategy. What are the risks and benefits of this strategy for Anacomp’s shareholders?

3. (20 points) How is Anacomp’s accounting influenced by the way the company organizes and finances its new product development?

Note: At the time of the case, software developments costs were allowed to be capitalized even when a company did not use the R&D partnership mechanism.

4. (15 points) Compare Anacomp’s cash flow performance with its accounting performance. What is your evaluation of the company’s financial condition?

5. (10 points) What is your assessment of Anacomp’s future? Justify your answer.

Show all your work/calculations (partial credit applies). Do not write as a paper, simply answer the above questions, but provide the supporting detail in doing so. Number each answer according to the corresponding question.

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