(Related to Checkpoint 13.1) (Calculating expected revenues) The owner of the Petreno Pharmaceutical Company is evaluating the expected annual sales for a new line of facial care products and estimates that there is a 63 percent chance that the product line will be extremely successful, in which case it will generate sales next year of 7.6 million. However, since the new product line has a unique appeal that will require substantial advertising by its manufacturer to gain consumer acceptance, there is a 37 percent chance that revenues for next year will be a modest 1.1 million. What is the expected level of revenues for the new product line? The expected total revenue for the new line of products is $ million. (Round to two decimal places.)

(Related to Checkpoint 13.1) (Calculating expected revenues) The owner of the Petreno Pharmaceutical Company is evaluating the expected annual sales for a new line of facial care products and estimates that there is a 63 percent chance that the product line will be extremely successful, in which case it will generate sales next year of 7.6 million. However, since the new product line has a unique appeal that will require substantial advertising by its manufacturer to gain consumer acceptance, there is a 37 percent chance that revenues for next year will be a modest 1.1 million. What is the expected level of revenues for the new product line? The expected total revenue for the new line of products is $ million. (Round to two decimal places.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 65 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $1.13 million. By going through research, B&B will be able to better target potential customers and will increase the probability of success to 80 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $18.3 million. If unsuccessful, the present value payoff is $5.3 million. The appropriate discount rate is 13 percent. Calculate the NPV for the firm if it conducts customer segment research and if it goes to market immediately. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Market immediately Research option Should the firm conduct customer segment research or go to the market immediately? O Market…
B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 55 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $1.18 million. By going through research, the company will be able to better target potential customers and will increase the probability of success to 70 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $18.8 million. If unsuccessful, the present value payoff is only $5.8 million. The appropriate discount rate is 15 percent. Calculate the NPV for the firm if it goes to market immediately and if it conducts customer segment research. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.)
C&D has a new baby powder ready to market. If the firm goes directly to the marketwith the product, there is only a 60 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $550,000. By going through research, B&B will be able to better target potential customers and will increase the probability of success to 75 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $26 million. If unsuccessful, the present value profit is only $4.2 million. Should the firm conduct customer segment research or go directly to market? The appropriate discount rate is 12 percent. answer on an excel file
B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 55 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $875,000. By going through research, B&B will be able to better target potential customers and will increase the probability of success to 70 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $16.5 million. If unsuccessful, the present value payoff is $7.5 million. The appropriate discount rate is 13 percent. Calculate the NPV for the firm if it conducts customer segment research and if it goes to market immediately. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89. Should the firm conduct customer segment research or go to the market immediately? multiple choice…
PLEASE SOLVE IN EXCEL :B&B has a new baby powder ready to market. If the firm goes directly to the market with the product, there is only a 60 percent chance of success. However, the firm can conduct customer segment research, which will take a year and cost $1.21 million. By going through research, the company will be able to better target potential customers and will increase the probability of success to 75 percent. If successful, the baby powder will bring a present value profit (at time of initial selling) of $19.1 million. If unsuccessful, the present value payoff is only $6.1 million. The appropriate discount rate is 14 percent. Calculate the NPV for the firm if it goes to market immediately and if it conducts customer segment research. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Should the firm conduct customer segment research or go to the market immediately? multiple…
Gidget has a new widget to bring to market. If the firm goes directly to market with the product, there is a 60% chance of success. However, the firm can conduct customer segment research, which will take a year and cost $5,000,000. By going through research, the company can better target potential customers and increase the probability of success to 75%. If successful, the widget will bring a present value profit (at the time of initial selling) of $90 million. If unsuccessful, the present value profit is only $15 million. The appropriate discount rate is 10%. Calculate the NPV for conducting customer segment research. (Enter whole numbers, e.g. 5 million should be 5,000,000)
Please answer.
Phlight Restaurant is considering a delivery service. The firm expects that sales from the new service will be $150,000 per year. Phlight currently offers a sit-down service with annual sales of $100,000. While many of the delivery sales will be to new customers, Phlight estimates that 60% of their current sit-down customers will switch and use the delivery service. The level of incremental sales associated with introducing the delivery service is closest to: Select one: a. $90,000 b. $150,000 c. $60,000 d. $120,000
(Related to Checkpoint 13.2 and Checkpoint 13.3) (Comprehensive risk analysis) Blinkeria is considering introducing a new line of hand scanners that can be used to copy material and then download it into a personal computer. These scanners are expected to sell for an average price of $95 each, and the company analysts performing the analysis expect that the firm can sell 103,000 units per year at this price for a period of five years, after which time they expect demand for the product to end as a result of new technology. In addition, variable costs are expected to be $21 per unit and fixed costs, not including depreciation, are forecast to be $1,020,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $9.7 million that has no residual or salvage value, and will have an expected life of five years. In addition, the firm expects it will have to invest an additional $309,000 in working capital to support the new business. Other…
Eastern Auto Supply Limited produces and distributes auto supplies. The company is anxious to enter the rapidly growing market for long-life batteries that is based on lithium technology. Management believes that to be full competitive the new battery that the company is planning can’t be priced at more than Tk. 130. At this price management is confident that the company can sell 100,000 batteries per year. The batteries would require an investment of Tk. 5,000,000 and the desired ROI is 20%. Required: Compute the target cost of one battery.
Howard Weiss, Inc., is considering building a sensitive new radiation scanning device. His managers believe that there is a probability of 0.4 that the ATR Co. will come out with a competitive product. If Weiss adds an assembly line for the product and ATR Co does not follow with a competitive product, Weiss's expected profit is $40,000, if Weiss adds an assembly line and ATR follows suit, Weiss still expects $10,000 profit. If Weiss adds a new plant addition and ATR does not produce a competitive product, Weiss expects a profit of $600,000, if ATR does compete for this market, Weiss expects a loss of $100,000 a) Determine the EMV of each decision. b) Compute the expected value of perfect information.
A chain of take-away pizza stores is considering introducing a new line of gluten-free pizzas. Net revenue from the new line of pizzas is expected to total $500,000 per year, but 15% of this net revenue is forecast to consist of people switching from the regular pizzas to the gluten-free pizzas. How would you describe this situation in terms of the NPV analysis upon which the situation will be based. Question 1Answer a. There is a negative externality equal to $425,000 which should be included in the NPV analysis for the gluten-free pizza project. b. There is a positive externality equal to $425,000 which should be included in the NPV analysis for the gluten-free pizza project. c. There is a positive externality equal to $75,000 which should be included in the NPV analysis for the gluten-free pizza project. d. There is a negative externality equal to $75,000 which should be included in the NPV analysis for the gluten-free pizza project.

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