Answer:
False
Explanation:
The first part was true. A higher WACC results in a lower NPV simply because a higher discount rate results in a lower present value.
E.g. 100 / (1 + 6%)³ = 83.96, but if we increase r to 10%, then 100 / (1 + 10%)³ = 75.13
The second part is wrong because under the IRR method, the decision rule is very simple, all projects are accepted if their IRR is higher than the project's WACC (or discount rate). I.e. if hte project's WACC increases, so does the chance of the project being rejected because the IRR might be lower than the WACC.
Answer:
Letter A is correct. <u>Pull.</u>
Explanation:
A pull marketing strategy aims to increase demand for a product or service as consumer attraction to the product or service increases.
In this strategy, the marketing team should focus efforts on designing promotions that induce consumers to want a particular product through appeals for price benefits, brand value, and satisfaction. Increasing consumer perception and product desire directly increases product demand and business results.
Some examples of pull marketing are through email marketing, social media, promotions and discounts, advertising and others.
Answer:
The firm's profits if it charges the two prices as mentioned above = $ 1425
Explanation:
P.S - The exact question is -
Proof -
we calculate the profits individually for 2 different prices:
When price = $75:
Quantity sold = 15 units
Total revenue = 15 × 75 = $1125
Total cost = Marginal cost × quantity
= 20 x 15 = $ 300
⇒Total cost = $300
So,
Profit = 1125 - 300 = $825
When price = $35 :
Quantity sold = 55 - 15 (quantity purchased at price = $75)
⇒Quantity sold = 40
Total revenue = 40 × 35 = $1400
Total cost = Marginal cost × quantity
= 20 x 40 = $ 800
⇒Total cost = $800
So,
Profit = 1400 - 800 = $600
Now,
Total combined profit = 825 + 600 = $1425
∴ we get
The firm's profits if it charges the two prices as mentioned above = $ 1425
Find the attachment for solution.
Note: The .015 or 1.5% is a cost due to the insurance, that is why you include it
