Answer and Explanation:
The computation of the present values of both alternatives is shown below:
For alternative one, the lump sum amount is
= Yearly payment × PVIFA factor at 8% for 12 years
= $50,000 × 7.5361
= $376,805
And, in the alternative 2, the lumpsum amount i.e. present value is $452,000
So as we can see that the alternative 2 is better as the lumspsum amount is high as compared with the alternative 1
The marketing of services differs from product marketing because of the four fundamental differences involved in services: services are intangible, inseparable, heterogeneous, and perishable
One of the difficulties associated with value-based pricing is that the producer may end up running at loss because the price does cover the cost incurred during production.
The value-based pricing entails fixing of prices based on customer's perceived value of the product.
The companies who practiced the value-based pricing do so to make sure the product price and expectation of the customers match.
However, one of the difficulties associated with value-based pricing is that the producer may end up running at loss because the price does cover the cost incurred during production.
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Answer:
Jenny is engaging in Limited Decision Making.
Explanation: Limited Decision Making is the process in which a consumer spends time to compare between products and services that they are familiar with, but will need time to come to a reasonable decision that they believe is worth their money.
Sometimes, customers may come across brands that are unfamiliar within a familiar category, they will therefore need to gather information about this brand, and how it compares to the familiar brands that they are used to. This is also Limited Decision Making.
An example is when a consumer finds a new soft drink among familiar soft drinks that he/she is used to.
Answer:
Price of the Bond is $868.82
Explanation:
Market Value of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Price of the bond is calculated by following formula:
Market Value of the Bond = C/2 x [ ( 1 - ( 1 + r/2 )^-2n ) / r/2 ] + [ $1,000 / ( 1 + r/2 )^2n ]
Whereas
C = coupon payment = $110.00 (Par Value x Coupon Rate)
n = number of years = 7
r = market rate, or required yield = 14% = 0.14
P = value at maturity, or par value = $1,000
Price Value of the Bond = $110/2 x [ ( 1 - ( 1 + 14%/2 )^-2x7 ) / 14%/2 ] + [ $1,000 / ( 1 + 14%/2 )^2x7 ]
Price Value of the Bond = $55 x [ ( 1 - ( 1 + 7% )^-14 ) / 7% ] + [ $1,000 / ( 1 + 7% )^14 ]
Price of the Bond = $481.0+$387.82
Price of the Bond = $868.82
