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Brrunno [24]
3 years ago
8

Allegience Insurance Company’s management is considering an advertising program that would require an initial expenditure of $16

5,500 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $75,000, with associated expenses of $25,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience’s tax rate is 30 percent. (Hint: The $165,500 advertising cost is an expense.)
Required:

Compute the payback period for the advertising program.

Calculate the advertising program’s net present value, assuming an after-tax hurdle rate of 10 percent.
Business
1 answer:
nalin [4]3 years ago
3 0

Answer:

a. Pay back period is 4 years and 18 days

b. Net present value is - $5,909. Since the NPV is negative, the project should be rejected.

Explanation:

Note: See the attached for the calculation tables of a and b.

a. Pay back period = 4 years and [($2,565/$51,244)*365 days] = 4 years and 18 days approximately.

Download xlsx
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Answer:

b. social benefits will be greater than private benefits

Explanation:

Positive externalities can be defined as those that produce positive effects for society in relation to the consumption of a good or service.

This is because the social benefit is the sum of the private benefit plus the sum of the external benefit.

An example of positive externality pertinent to the present is the fact that vaccinating people generates greater positive effects on society, because when vaccinating an individual there is less chance of having more people infected with some disease.

So it is correct to say that the social benefits will be greater than the private ones. Letter b.

5 0
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kompoz [17]

Answer and Explanation:

Adjusted gross income abbreviated AGI is the tax payers gross income minus deductions used in arriving at taxable income(AGI less allowable deductions)

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8 0
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timama [110]

Answer:

Alan is better off by $15

Explanation:

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Lena [83]

Answer:

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The moral minimun is the less acceptable standard for ethical business behavior. Normally considered to be compliance with the law.

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Ymorist [56]

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