W Dawn and Amelia work for an international advertising agency. They are presented with four possible product campaigns for the year, of which they must choose only one. The annual interest rate is 9%. They must choose the campaign which will be most profitable to the company overall. The chart indicates the costs and benefits for each of the projects. A negative value indicates costs are greater than benefits for that time period. Use the information in the chart to calculate the net present values, and answer the questions. Campaign Globatel Wireless Dollars realized Dollars realized one today (in year from today (in thousands) thousands) -13 230 Yummy Tummy Pudding NiCad Electric Cars Excelsis Hot Air Balloons What is the net present value of the Excelsis Hot Air Balloon campaign (in thousands)? $ 115 44 -50 thousand -24 B. Yummy Tummy Pudding C. Excelsis Hot Air Balloons D. Globatel Wireless 110 Using your net present value calculations, which of the four campaigns are Dawn and Amelia most likely to select? A. NiCad Electric Cars Which of the following statements is true in relation to the information presented in the table? A. Only large companies can produce profits in the short term. B. The interest rate affected the present value of all of these options. C. Projects that incur costs will always produce a profit. D. Short-term payoffs may not always be the best option.
W Dawn and Amelia work for an international advertising agency. They are presented with four possible product campaigns for the year, of which they must choose only one. The annual interest rate is 9%. They must choose the campaign which will be most profitable to the company overall. The chart indicates the costs and benefits for each of the projects. A negative value indicates costs are greater than benefits for that time period. Use the information in the chart to calculate the net present values, and answer the questions. Campaign Globatel Wireless Dollars realized Dollars realized one today (in year from today (in thousands) thousands) -13 230 Yummy Tummy Pudding NiCad Electric Cars Excelsis Hot Air Balloons What is the net present value of the Excelsis Hot Air Balloon campaign (in thousands)? $ 115 44 -50 thousand -24 B. Yummy Tummy Pudding C. Excelsis Hot Air Balloons D. Globatel Wireless 110 Using your net present value calculations, which of the four campaigns are Dawn and Amelia most likely to select? A. NiCad Electric Cars Which of the following statements is true in relation to the information presented in the table? A. Only large companies can produce profits in the short term. B. The interest rate affected the present value of all of these options. C. Projects that incur costs will always produce a profit. D. Short-term payoffs may not always be the best option.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:W
Dawn and Amelia work for an international advertising agency. They are presented
with four possible product campaigns for the year, of which they must choose only
one. The annual interest rate is 9%. They must choose the campaign which will be
most profitable to the company overall. The chart indicates the costs and benefits
for each of the projects. A negative value indicates costs are greater than benefits for
that time period. Use the information in the chart to calculate the net present values,
and answer the questions.
Campaign
Globatel
Wireless
Dollars realized Dollars realized one
today (in
year from today (in
thousands)
thousands)
-13
230
Yummy
Tummy
Pudding
NiCad Electric
Cars
Excelsis Hot
Air Balloons
What is the net present value of the Excelsis Hot Air Balloon campaign
(in thousands)?
$
115
44
-50
thousand
-24
B. Yummy Tummy Pudding
C. Excelsis Hot Air Balloons
D. Globatel Wireless
110
Using your net present value calculations, which of the four campaigns are
Dawn and Amelia most likely to select?
A. NiCad Electric Cars
Which of the following statements is true in relation to the information
presented in the table?
A. Only large companies can produce profits in the short term.
B. The interest rate affected the present value of all of these options.
C. Projects that incur costs will always produce a profit.
D. Short-term payoffs may not always be the best option.
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