Answer:
a. increase the price of the software
Explanation:
If I were the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than 1. In order to increase total revenues from that product, I will increase the price of the software.
The reason for such decision is based on the fact that when the price elasticity of demand of a product is lower than 1, an increase in the price of that product results in an increase in revenue for the seller.
Answer:
The discount rate for this project is 5%.
Explanation:
The discount rate for the new project will be the required rate of return or the cost of equity that will be used to discount the cash flows from the project to calculate its Net present value. Using the CAPM, we can calculate the required rate of return (r) as:
r = rRF + beta * rpM
Where,
- rRF is the risk free rate
- beta is the stock's beta or measure of risk
- rpM is the market risk premium
r = 2% + 0.5 * 6% = 0.05 or 5%
Answer:
contest
Explanation:
Based on the information provided within the qeustion it can be said that this promotion is an example of a very successful contest. A contest is an event in which a large amount of people compete in a certain task in order to prove that they are the best at that task. These events usually have a grand prize for the winner. Which in this scenario this contest's top 100 finalists are flown to Florida to compete in another contest in order to win $1 million dollars.
Answer:
Effect on income= $115,000 decrease
Explanation:
Giving the following information:
Fixed costs= $45,000
Number of units= 20,000
Unitary contribution margin= $8
<u>To calculate the effect on income, we need to use the following formula:</u>
Effect on income= decrease in fixed costs - decrease in contribution margin
Effect on income= 45,000 - 20,000*8
Effect on income= $115,000 decrease