Answer:
27.79
Explanation:
According to the given situation, the computation of average fixed inspection cost per unit is shown below:-
Average fixed cost of inspection = Inspection cost ÷ Machine hous in a month
= $197,309 ÷ 7,100
= 27.79
Therefore for computing the average fixed inspection cost per unit we simply applied the above formula.
Answer:
Answer to each part of the question is given below separately under specific headings with detailed explanation.
Explanation:
<u>a) Branding strategy recommendation</u>
The branding strategy they should opt is a multi-branding strategy, in which a company's objective is to market more than one product and/or brand under the same hood in order to increase their overall market share. This strategy is somewhat used by other known car manufacturers such as Toyota (Lexus), Honda (Acura) etc.
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<u>b) Branding strategy trade-offs</u>
The trade-off with this strategy is that the attention of Ferrari would be diverted from their main market segment and therefore, they will not be providing new products to the luxury market.
This will give the other companies in the same market segment the opportunity to increase their market share in the same segment.
<u>c) Opinion on the trading-down strategy</u>
It is fairly a risk for Ferrari to opt for the trading down strategy. This is due to the fact that their main market and objective is the luxury market to buy their expensive cars. Focusing on the new strategy could hurt their brand equity and this may impact their loyal buyers.
However, such could be avoided if they market this strategy with a foreign brand name and promote the name under the Ferrari hood by saying that the foreign brand has been designed by the Ferrari. Keeping the original Ferrari name and objective separate from this brand.
<span>Topics Reference Advisors Markets Simulator Academy</span> Profitability Index<span>By Investopedia</span><span> SHARE </span><span> </span><span> Chapter One Chapter Two Chapter Three Chapter Four Chapter Five </span><span>Chapter One Chapter Two Chapter Three Chapter Four Chapter Five</span><span><span>4.1 Net Present Value And Internal Rate Of Return4.2 Capital Investment Decisions4.3 Project Analysis And Valuation4.4 Capital Market History4.5 Return, Risk And The Security Market Line</span><span>4.1.1 Introduction To Net Present Value And Internal Rate Of Return4.1.2 Net Present Value4.1.3 Payback Rule4.1.4 Average Accounting Return4.1.5 Internal Rate Of Return4.1.6 Advantages And Disadvantages Of NPV and IRR4.1.7 Profitability Index4.1.8 Capital Budgeting</span></span>
A profitability index attempts to identify the relationship between the costs and benefits of a proposed project. The profitability index is calculated by dividing the present value of the project's future cash flows by the initial investment. A PI greater than 1.0 indicates that profitability is positive, while a PI of less than 1.0 indicates that the project will lose money. As values on the profitability index increase, so does the financial attractiveness of the proposed project.
The PI ratio is calculated as follows:
<span>PV of Future Cash Flows
</span>Initial Investment
A ratio of 1.0 is logically the lowest acceptable measure for the index. Any value lower than 1.0 would indicate that the project's PV is less than the initial investment, and the project should be rejected or abandoned. The profitability index rule states that the ratio must be greater than 1.0 for the project to proceed.
For example, a project with an initial investment of $1 million and present value of future cash flows of $1.2 million would have a profitability index of 1.2. Based on the profitability index rule, the project would proceed. Essentially, the PI tells us how much value we receive per dollar invested. In this example, each dollar invested yields $1.20.
The profitability index rule is a variation of the net present value (NPV) rule. In general, if NPV is positive, the profitability index would be greater than 1; if NPV is negative, the profitability index would be below 1. Thus, calculations of PI and NPV would both lead to the same decision regarding whether to proceed with or abandon a project.
However, the profitability index differs from NPV in one important respect: being a ratio, it ignores the scale of investment and provides no indication of the size of the actual cash flows.
The PI can also be thought of as turning a project's NPV into a percentage rate.
(Find some profitable ideas in <span>8 Ways To Make Money With Real Estate</span> and Outside The Box Ways To Get Money.)
Answer : It hopes to make more money available for loans.
