Answer:
1. Sunk costs : $3.2 billion is a sunk cost as it is already incurred.
2. Opportunity costs: $352 million investment for finishing project is an Opportunity cost. However it will yield $15.1 million per annum for next 5 Yrs.
So Present Value of this CF is less than $15.1 5=$75.5 million.
So Net Present Value = CF0 + CF1 + ......+ CF5 = -352 + Less than 75 = Negative.
So another Opportunity of selling the Satellite for $460 million is a better option.
3. Specify the relevant cash flows.
If additional $352 million investment is undertaken,
$352 million will be Cash outflow in Y(0). It will result in Annual CF of $15.1 million for next 5 yrs.
Answer:
3. a smaller opportunity cost of investment and so planned investment spending increases.
Explanation:
Opportunity cost is defined as the foregone alternative when a person undertakes an activity. For example going to work is the opportunity cost of staying at home to rest.
Opportunity cost is weighed against activity to be undertaken.
In this instance the opportunity cost of investment is the alternative foregone by investors.
As interest rate decreases it makes investment attractive because the cost of doing business decreases. This make other alternatives less attractive (smaller opportunity cost).
Investment now increases.
The monetary regulation agencies use interest rate a tool to either boost or reduce investment. The higher the interest rate th lower investment, and vice versa
Answer:
Foster an innovative culture and climate that permits experimentation, risk-taking , and failure.
Explanation:
The director of the new product development in the given case comes across that even after the proper research done by his team regarding the product acceptance by the consumers the outcome was not the same.
In order to keep his team open to innovation the director Rinn should encourage and develop an environment of creating new ideas and products which should open up the scope for experiments , risks and failure of the product keeping in mind that all experiments does not necessarily leads to positive results and involves risks as well.
That sounds good but you need to do good in school to do that I think
Answer and Explanation:
There are two main pricing objective and strategy i.e competitive pricing and penetrative pricing which are explained below:
1. Competitive pricing :
In this Agatha's Inc, all five rivals should evaluate pricing models for a related kind of product. If your product has a little more value added than your collegaues, then you can establish a target price target that is higher than the competitors.
Now to do that, it's necessary to send the customer a message that they're purchasing value for a price.
2. Penetrative pricing :
When the target price is set on the basis of the competitive pricing model , it is important to obtain the product favourably from the consumer and to do so you can start selling a little lower than the target price and sell the goods as a discount or promotional deal.
If the initial sales are strong and buyers like the product then return the product to target pricing and do intensive marketing to sell the message that the product 's cost is a bargain for the value provided by the company.
The mixture of the above two pricing strategies would ensure a better positioning of Agatha's Inc product with better profitability.