QUESTION 107 An online retail company is launching an advertising campaign. The initial cost will be $700,000 for planning and an annual cost of $30,000 per year for the first 5 years. It is expected that through this campaign, the market share will increase and result in an increase in revenues permanently by $50,000 per year. In additional, the immediate effect of this campaign will generate additional revenues for the first 5 years in the pattern of an arithmetic gradient with $120,000 in the first year, declining by $30,000 per year to zero in the fifth year. Estimate the IRR of this campaign project. IRR is between 4% and 5% O IRR is between 8% and 9% IRR is between 11% and 12% O IRR is between 13% and 14% O IRR is between 15% and 20%
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- An advertising campaign will cost $450,000 for planning and $50,000 in each of the next five years. It is expected to increase revenues permanently by $50,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $25,000 in the first year declining by $5,000 per year to zero in the sixth year. Estimate the IRR of this investment. O 7% < IRR < 8% O 8% < IRR < 9% O 9% < IRR <10% O 10% < IRR < 11% O 11% < IRR < 12%An advertising campaign will cost $500,000 for planning and $50,000 in each of the next five years. It is expected to increase revenues permanently by $50,000 per year. Additional revenues will be gained in the pattern'of an arithmetic gradient with $20,000 in the fírst year, declining by $4,000 per year to zero in the sixth year. Estimate the IRR of this investment. 7% < IRR < 8% 8% < IRR < 9% 9% < IRR < 10% 10% < IRR < 11% 11% < IRR < 12%An advertising campaign will cost $306,000 for planning and $48,000 in each of the next six years. It is expected to increase revenues permanently by $48,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $24,000 in the first year, declining by $6,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 8 percent, is this a good investment? the MARR, so the advertising campaign The IRR is percent, which is good investment. (Round to one decimal place as needed.) a
- An advertising campaign will cost $270,000 for planning and $48,000 in each of the next six years. It is expected to increase revenues permanently by $48,000 per year. Additional revenues will be gained in the pattern of an arithmetic gradient with $24,000 in the first year, declining by $6,000 per year to zero in the fifth year. What is the IRR of this investment? If the company's MARR is 8 percent, is this a good investment? The IRR is percent, which is the MARR, so the advertising campaign a good investment. (Round to one decimal place as needed.)Firm Z has invested $4 million in marketing campaign to assess the demand for a product Manish. This product will be in the market next year and will last five years. Revenues are projected to be $50 million per year along with expenses of $20 million. The firm spends $15 million immediately and equipment that will be depreciated using MACRS depreciation 20. Additionally, it will use some fully depreciated existing equipment that has a market value of $4 million. Finally, minaj will have no incremental cash or inventory requirements. But receivables are expected to account for 15% of annual sales. Payables are expected to be 15% of the annual cost of goods sold between year one and four. All accounts payables and receivables will be settled at the end of your five. Based on this information and WACC in the first part of this question, find the NPV of the project. Identify the IRR of the project. Draw and PV versus our graph of the project. Will you accept this project? Why? Please show…Firm Z has invested $4 million in marketing campaign to assess the demand for a product Manish. This product will be in the market next year and will last five years. Revenues are projected to be $50 million per year along with expenses of $20 million. The firm spends $15 million immediately and equipment that will be depreciated using MACRS depreciation 20. Additionally, it will use some fully depreciated existing equipment that has a market value of $4 million. Finally, they will have no incremental cash or inventory requirements. But receivables are expected to account for 15% of annual sales. Payables are expected to be 15% of the annual cost of goods sold between year one and four. All accounts payables and receivables will be settled at the end of your five. Based on this information andCost of debt is 2.45%, cost of equity is 11%, cost of preferred stock is 5% and WACC is 5.42%., find the NPV of the project. Identify the IRR of the project. Will you accept this project? Why?…
- Investing $2,000,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 3.0% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,608,638. Assuming similar sales next year, the 3.0% increase in demand will provide $4,908,259 of additional revenue. With the overall contribution margin of 34.2%, after direct costs this revenue will add $1,678,625 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest month? A. 10 months B. TQM investment will not have a significant financial impact C. 14 months D. 5 monthslocal delivery service is looking to increase their capacity by hiring more workers and purchasing new vehicles. They anticipate their yearly revenue to increase by $45,000 each year for the next 10 years. Additionally, they anticipate having an additional $12,500 every 3 years starting in year 2 due to local event that requires a significant amount of shipping. Assuming an interest rate of 6%, compute the equivalent present worth of the revenue this company will generate from these sources of revenue over this 10 year period. Answer: $359508.75A new product will cost $750,000 to design, test prototypes, and set up for production. Net revenue the first year is projected to be $225,000. Marketing is unsure whether future year revenues will (a) increase by $25,000 per year as the product’s advantages become more widely known or (b) decrease by 10% per year due to competition. A third pattern of increasing by $25,000 for one year and then decreasing by 10% per year has been suggested as being more realistic. The firm evaluates projects with a 12% interest rate, and it believes that this product will have a 5-year life. Calculate the present worth and rate of return for each scenario.
- Pittsburgh Custom Products (PCP) purchased a new machine for ram-cambering large I beams. PCP expects to bend 50 beams at $1,200 per beam in each of the first 3 years, after which it expects to bend 100 beams per year at $2,900 per beam through year 12. If the company's minimum attractive rate of return is 15% per year, what is the present worth of the expected revenue? The present worth of the expected revenue is $Sundial Resorts' new Chief Marketing Officer has pledged to increase sales from its current level of $1.25 million at a rate of 5% per year until the firm hits sales of $2.75million. How long will it take to hit the target goal at this rate of increase? O A. Between 14 and 15 years. O B. Between 11 and 12 years. O C. A little more than 16 years. O D. A little less than 16 years.Firm Z has invested $4 million in marketing campaign to assess the demand for the product Minish. This product will be in the market next year and will last five years. Revenues are projected to be $50 million per year along with expenses of $20 million. The firm spends $15 million immediately on equipment that will be depreciated using MACRS depreciation to zero. Additionally, it will use some fully depreciated existing equipment that has a market value of $4 million. Finally, Minish will have no incremental cash or inventory requirements (products will be shipped directly from the contract manufacturer to customers). But, receivables are expected to account for 15% of annual sales. Payables are expected to be 15% of the annual cost of goods sold (COGS) between year 1 and year 4. All accounts payables and receivables will be settled at the end of year 5. Based on this information and WACC in the first part of the question, find the NPV of the project. Identify the IRR of the…