Answer:
Option D is false
Explanation:
EVC is not the same thing as willingness to pay because EVC is a measure of the value the product produces for a particular customer but doesn't have any effect on it's customers ability to pay for the estimated value.
In the case of snack corp, when the price they sell their product at is <u>below</u> the average cost of production, profits are <u>negative</u> due to<u> </u><u>negative</u> average profit.
Average profit is defined as total profit divided by performance, or total profit for each period divided by a number of periods. The formula for calculating average profit is Average Revenue - Average Cost = Average Profit.
But in general, small businesses have healthy profit margins between 7% and 10%. However, be aware that certain companies may have lower profit margins. B. A retail or food company. This is because overhead costs tend to be high. Average profit is calculated by dividing the total profit for the year by the number of years of profit.
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Answer:
Consider the following analysis.
Explanation:
A capital budgeting decision for Southwest airline should consider the following aspects: -
Assessment of the cash flows gained on investment into the Cuba market adjusted for time value of money. This evaluation of profitability, assessment of demand in Cuba, assessment of investment per traffic unit in Cuba forms an integral part of the investment decision. Major methods to evaluate profitability are NPV (Net Present Value) and IRR (Internal rate of Return). The NPV method calculates the difference in the initial investment and present value of cash flows over the period of the project. IRR method considers the discount rate at which NPV of project cash flows is zero. A project with positive NPV and higher IRR is considered.
The proposed investment should ensure that the interests of all stakeholders are safeguarded i.e Creation of Value proposition for shareholders as well as ensuring timely repayments to existing lenders of the project
.
Raising of capital for the Cuba project considering the company’s existing policies on debt and equity and cost benefit analysis. An equity funding would be costlier alternative than debt funding. However, a debt funding may increase the risk of lowered post tax profits and decreased returns to the shareholders, while an equity funding would allow the company an option in deferring the distribution of the profits or part-distribution of profits to the shareholder by deciding on the dividend payout ratio.
Management of aircrafts and other major assets of the company – The company should ensure that the existing aircrafts are effectively utilized for providing the airline services in Cuba. Acquisition of additional aircrafts along with other assets (warehousing facility for repairs etc.) should also be taken into consideration.
An adequate working capital management ensuring smooth day to day operations should be undertaken. This includes management and allocation of funds for day to day operations like fuel expenses, airport operating charges, repair and maintenance of aircrafts etc.
Answer:
It is more profitable to receive $23,750 today than $25,000 in one year.
Explanation:
Giving the following information:
Future Value= $25,000
Present Value= $23,750
Risk-free interest rate= 6%
<u>We need to calculate the future value of $23,750. If it is higher, it is more convenient to receive $23,750 today.</u>
FV= PV*(1+i)^n
FV= 23,750*(1.06^1)
FV= $25,175
It is more profitable to receive $23,750 today than $25,000 in one year.