1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
vladimir2022 [97]
3 years ago
13

An investment counselor calls with a hot stock tip. He believes that if the economy remains​ strong, the investment will result

in a profit of ​$60000. If the economy grows at a moderate​ pace, the investment will result in a profit of ​$10000. ​However, if the economy goes into​ recession, the investment will result in a loss of ​$60000. You contact an economist who believes there is a 30​% probability the economy will remain​ strong, a 60​% probability the economy will grow at a moderate​ pace, and a 10​% probability the economy will slip into recession. What is the expected profit from this​ investment?
Business
1 answer:
zmey [24]3 years ago
3 0

Answer:

Expected profit = $18,000

Explanation:

<em>The expected profit is the weighted average of all the possible profits associated with the different possible outcome weighted according to the probability</em>

Outcome              Profit         Probability      Prob ×  Profit

Strong            60,000    ×  30%          =    18,000

Growth              10,000    ×   60%        =    6,000

Recession       (60,000)   ×   10%        =     (6000)

Expected profit = 18,000 + 6000 + (6000) = $18,000

Expected profit = $18,000

You might be interested in
Charlie’s Furniture Store has been in business for several years. The firm's owners have described the store as a "high-price, h
wolverine [178]

Answer:

a. Calculate current sales and ROI for Charlie’s Furniture Store.

asset turnover formula = net sales / average assets

0.4 = net sales / $800,000

net sales = $320,000

ROI = net income / investment

net income = $320,000 x 34% = $108,800

ROI = $108,800 / $800,000 = 13.6%

b. Assuming that the new strategy would reduce margin to 20%, and assuming that average total assets would stay the same, calculate the sales that would be required to have the same ROI as Charlie’s currently earns.

net income = net sales x 20% (new margin)

net sales = $108,800 / 20% = $544,000

c. Suppose you presented the results of your analysis in parts a and b of this problem to Charlie, and he replied, "What are you telling me? If I reduce my prices as planned, then I have to practically double my sales volume to earn the same return?" Given the results of your analysis, what is the actual amount of increase in sales required?

sales increase = ($544,000 - $320,000) / $320,000 = 70% increase

d. Now suppose Charlie says, "You know, I'm not convinced that lowering prices is my only option in staying competitive. What if I were to increase my marketing effort? I'm thinking about kicking off a new advertising campaign after conducting more extensive market research to better identify who my target customer groups are." In general, explain to Charlie what the likely impact of a successful strategy of this nature would be on margin, turnover, and ROI.

An extensive market research and a "successful" marketing campaign are generally expensive. Even if the marketing campaign is really successful in increasing sales, costs would also increase. So the equation may or may not change, depending if the contribution margin of the additional units sold will be able to cover the expenses of a complex marketing campaign. If you spend $100 to earn $100 more, your situation hasn't changed at all. Which means that net income may or may not increase, therefore, the profit margin, ROI and asset turnover may not change.

7 0
3 years ago
Explain how a price system moves a market toward the quilibrium price
lions [1.4K]

Answer:

By setting the price of goods and services at a level where the suppliers and consumers feel comfortable, the quantity of goods and services supplied will be the same as the quantity of goods demanded.

Explanation:

A price system is a means of arranging economic activities by setting the standard prices of goods and services in that particular economy. In this way the agents of demand and supply can have an estimate of the price of various goods and services. In this way, a supplier who doesn't know the price of a goods or service that he/she plans to sell to a different country or region can use the price system to adjust their selling price effectively. On the same note, the consumers can also acquire goods and services that they have never demanded before by using the price system to determine the standard prices for those goods or services.  

Prices are a reflection of the consensus between suppliers and consumers about the value of goods and services. The equilibrium price can be defined as the price where the quantity of goods supplied equals the quantity demanded. By setting the price of goods and services at a level where the suppliers and consumers feel comfortable, the quantity of goods and services supplied will be the same as the quantity of goods demanded.

8 0
3 years ago
Mary Robertson sells tires at a large car service center. She earns 10% commission on the first $1,000, 15% on the next $2,000,
prohojiy [21]

$560 I just took the test on primavera and this was right.

5 0
3 years ago
You are angry at a friend who forgot to meet you for lunch, and you decide to write an e-mail about how it made you feel. What s
maw [93]
Think about it first because you don't know why they forgot to meet you. Something could have happened. So if your that angry call to find out what was the reason they didn't meet you.
4 0
3 years ago
Suppose your grandma sends you $100 for your birthday and you deposit that $100 in your checking account. the reserve ratio is 1
NemiM [27]
Based upon this deposit, the bank's excess reserves have increased by 90, and if the bank lends these excess reserves, the money supply could eventually grow by as much as an additional 900. 
7 0
3 years ago
Other questions:
  • Assume that Lucas's marginal tax rate is 32 percent and his tax rate on dividends is 16 percent. If a dividend-paying stock (wit
    11·1 answer
  • When manufacturing overhead costs are assigned to production in a process cost system, it means that
    8·1 answer
  • A ___________ makes databases more useful for obtaining information.
    11·1 answer
  • An increase in the cost of producing video tape shifts the supply curve of video tape ________ and shifts the demand curve for v
    14·1 answer
  • Joey's first task as a new employee at a Technology firm is to write a computer program to perform a predictable task. Joey can
    10·1 answer
  • Which is not a factor in determining the amount you should consume from each food group in the mypyramid plan?
    12·2 answers
  • In the Keynesian-cross analysis, if the consumption function is given by C = 20 + 0.7 (Y – T), and planned investment is 100, G
    5·1 answer
  • Consider the following project network and activity times (in weeks): Activity A B C D E F G H Time 5 3 7 6 7 3 10 8 How much ti
    6·1 answer
  • In "The Founder," The McDonald brothers are worried about maintaining standards in their franchises. What are at least three sta
    5·1 answer
  • In marketing, what are the five P's used for?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!