Businesses in the hospitality, aviation, and other tourism-related industries frequently use yield management as a pricing approach to maximize income from perishable inventory.
A yield management technique enables hotel operators to maximise the revenue they generate from a limited number of hotel rooms that must be booked by particular dates. Managers can predict demand and adapt in accordance with it by using historical performance data and broad industry trends. Two of the most helpful tools accessible to managers in the field of hotel management are yield management and revenue management, which enable them to maximise the revenue they receive from guests. Despite the tight connections and many similarities between the two ideas, there are also some significant distinctions. Please read the article "What is Revenue Management?" for more information on revenue management in detail.
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Consider the case of Turnbull Co. Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 11.1%, and its cost of preferred stock is 12.2%. If Turnbull can raise all of its equity capital from retained earnings, its cost of common equity will be 14.7%. However, if it is necessary to raise new common equity, it will carry a cost of 16.8%. If its current tax rate is 40%, how much higher will Turnbull's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? 0.64% 0.98% 0.86% 0.75% Turnbull Co. is considering a project that requires an initial investment of $1, 708,000. The firm will raise the $1, 708,000 in capital by issuing $750,000 of debt at a before-tax cost of 11.1%, $78,000 of preferred stock at a cost of 12.2%, and $880,000 of equity at a cost of 14.7%. The firm faces a tax rate of 40%. What will be the WACC for this project? Consider the case of Kuhn Co. Kuhn Co. is considering a new project that will require an initial investment of $20 million. It has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. Kuhn has noncallable bonds outstanding that mature in 15 years with a face value of $1,000, an annual coupon rate of 11%, and a market price of $1, 555.38. The yield on the company's current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $8 at a price of $95.70 per share. Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $33.35 per share, and it is expected to pay a dividend of $1.36 at the end of next year. Flotation costs will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 40%. Determine what Kuhn Company's WACC will be for this project.
Turnbull's weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings is 0.75%. Option A is correct.
What is Weighted Average Cost of Capital?Weighted average cost of capital is a weighted average of each source of long term fund or capital employed with its market expectation of investor considering the tax adjustment on it during the financial year.
It shows the economic value addition from net operating profit after tax over the weight average cost of capital employed in long term securities such common stock, preferred stock, Long term debt & Retained earnings.
It can be calculated from following formula:
[tex]WACC = W1*Cost of Debt + W2 * Cost of preferred stock + W3 * cost of equity[/tex]
WA Cost of equity = value of common stock & value of retained earnings in the firm.
A) WACC (old) = 0.58 × 11.1% (1-.40) + 0.06 × 12.20% + 0.36 × 14.70%
Cost of Capital Employed = Debt weight × after tax debt rate + Preferred equity weight × Cost of preferred Equity + Cost of Common equity & retained earnings × cost of equity
∴ WACC = 9.89 % (old) if equity raise from retained earnings.
B) WACC (new) = 0.58 × 11.1% (1-.40) + 0.06 × 12.20% + 0.36 × 16.80%
∴ WACC = 10.64% (New) if equity raise from fresh issue.
Thus the increase in WACC after issue of fresh equity from market is 0.75% (10.64% - 9.89%).
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Using the following accounts and a predetermined overhead rate of 130% of direct labor cost, compute the amount of applied overhead. Work in Process Inventory Beginning WIP 35,200 Direct materials 55,300 Direct labor ? Factory overhead 2 To finished goods Ending WIP 25, 200 Finished Goods Inventory Beginning FG 5,200 Cost of Goods Mfg'd 203, 300 203,300 Multiple Choice $71,890 $138.000 $60,000 25,200 Ending WIP Finished Goods Inventory Beginning FG 5,200 Cost of Goods Mfg'd 203, 300 Multiple Choice $71,890. $138,000 $60,000 $78,000 $90,500
Total of direct labor and factory overhead using work in progress is 1,38,000
Cost of goods manufactured 20300
Less beginning WIP (35200)
Less Direct material (55300)
Add ending WIP 25200
Total of direct labor and factory overhead 1,38,000
Note: We get cost of goods manufactured by adding beginning WIP ,direct labor, direct material and subtract ending WIP from it.
Work in progress- The terms "work in process," "work in progress," "goods in process," and "in-process inventory" all relate to the worth of a company's partially finished goods that are awaiting completion and potential sales. WIP is a vital input for computing inventory on a company's balance sheet and is utilized in supply chain management.
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during bruce company’s first year of operations, the company purchased $3,400 of supplies. at year-end, a physical count of the supplies on hand revealed that $1,375 of unused supplies were available for future use. how will the related adjusting entry affect the company’s financial statements?
Adjusting entry affect the company’s financial statements is ( $3400 - $ 1375 = $2025) .so answer of given question is $2025.
How Do Financial Statements Work?Financial statements are written records that outline a company's operations as well as its financial success. Government organizations, accounting firms, and other entities frequently audit financial statements to assure their accuracy and for reasons related to taxes, financing, or investment. The balance sheet, income statement, cash flow statement, and statement of changes in equity are the four basic financial statements used by for-profit organizations. Nonprofit organizations employ a comparable but distinct set of financial statements.
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most economists believe that classical theory describes the world in the short run but not in the long run. a. true b. false
Most economists believe that classical theory describes the world in the short run but not in the long run. - false
A principle is a rational form of summary considering a phenomenon, or the results of such questioning. The system of contemplative and rational thinking is regularly associated with such approaches as observational observe or research. Theories may be scientific, belong to a non-medical discipline, or no area at all. relying at the context, a idea's assertions may, for instance, include generalized explanations of the way nature works. The phrase has its roots in ancient Greek, however in modern use it has taken on numerous related meanings.
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ruritania's economy has been enjoying positive but slowing growth. the ministry of economics is considering various policy measures. place each option in the appropriate column according to whether it will most likely lead ruritania on a business cycle path towards continued growth or into a recession. increasing taxes would lead to increasing government spending would lead to increasing the federal budget surplus would lead to decreasing taxes would lead to increasing the federal budget deficit would lead to decreasing government spending would lead to
Growth in the economy:
decreasing taxes
increasing government expenditure
increasing the federal budget deficit
All these will increase the growth of the economy because the demand in the market will increase and that will increase economic activity and business growth too.
Slowing down the economy:
Decreasing the government expenditure
increasing the taxes
increasing the federal budget surplus,
All this will decrease the demand and economic activity in the market.
A market is defined as the aggregate of all buyers and sellers in the region or regions under consideration. A region can be a globe, country, region, state, or city. The value, cost, and price of traded items are governed by the forces of supply and demand in the market.
Activities in the market economy are unplanned. It is determined by the demand and supply of goods and services rather than being organized by a central authority. The US, UK, and Japan are examples of market economies.
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you are giving a presentation on accounting at a local business. you’re expecting your audience to be uninterested in your topic because most of the attendees are required to be there and are not interested in accounting. what supporting materials will help you keep the audience’s attention?
Based on presentation strategies and communication skills, given the situation described in the question, the supporting materials that will help you keep the audience’s attention are "Humor, Cartoons, and Colorful Visuals."
What are Presentation Strategies?Presentation Strategy is a term that is used to describe the techniques or methods used by the presenter of lectures or keynotes, to ensure the message being delivered is grabbed and digested by the targeted audience.
The purpose of the presentation strategy is to deliver an effective message that will ginger and call the targeted audience to action in their mind.
Some of the presentation strategies are:Making a good preparation Stay practical in the message deliveryMake the message personalAdd colorful imageryEnsure there relatable objects like cartoons of humansAdd humor to message delivery in a potent wayShare your passion as you deliver messages, etc.Hence, in this case, it is concluded that the correct answer is "Humor, Cartoons, and Colorful Visuals."
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a store has the following demand figures for the last four years: year demand 1 100 2 150 3 98 4 112 with a three-year moving average, what is the demand forecast for year 4?
The demand forecast for year 4, given the three-year moving average for the store, would be 120
How to find the demand forecast?When finding the demand forecast for a company's activities in a year, by using the moving average method, you find the average of the activities in the number of years required by the moving average.
With a three-year moving average, you find the average of the demand figures from the previous 3 years which would be :
= ( 112 + 98 + 150 ) / 3 years
= 360 / 3
= 120
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Shelby writes an essay for her economics class. She has carefully read several sources on the topic. She includes a references page with her essay but does not include citations in the text of her essay. What is this an example of?
Shelby does not cite sources within the body of her essay; instead, she includes a references page. A case of plagiarism is this.
What types of references are there?
There are numerous unique citation styles, but the majority of them follow one of the parenthetical, numerical, or note citations' three fundamental rules.
Which reference is used most frequently?
One of the most popular and widely used citation and referencing styles in the academic community is the Modern Language Association (MLA) style.
What policies apply to plagiarism?
A student may be suspended or expelled as a result of plagiarism accusations. The student might not be allowed to enroll in college after high school or from another college if the ethics violation is shown in their academic record.
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Upscale retailers, such as Nordstrom, feature customer service as theirsignificant point of difference and use that difference to compete with lessexpensive stores. This is known as ___________ competition.a) target forcingb) upscalec) point-of-differenced) nonprice
This is known as nonprice competition. The correct answer is option (d).
What is non-price competition?In non-price competition, a company strives to differentiate its product or service from competing items on the basis of features like design and workmanship," according to a marketing strategy. Because it occurs between two or more producers who sell goods & services at the same prices but strive to expand their respective market shares by non-price factors like marketing strategies and higher quality, it frequently happens in imperfectly competitive markets.
Companies that rely on non-price competitiveness use promotional expenditures including marketing campaigns, brand management charges, advertising, sales staff, promote sales, free gifts, and complimentary delivery services instead of engaging in price wars with their rivals.
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Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data: Process Type Annualized Fixed Cost of Plant and Equip. Variable Costs Labor Material Energy Mass Customization $1,260,000 30 18 12 Intermittent $1,000,000 24 26 20 Repetitive $1,625,000 28 15 12 Continuous $1,960,000 25 15 10 Metters Cabinets projects an annual demand of 24,000 units for the Maxistand. The maxistand will sell for $120 per unit. a)Which process type will maximize the annual profit from producing the Maxistand? b)What is the value of this annual profit?
The amount of money made from the end of the period is called net profit.It is calculated by dividing the total amount spent on costs by the total amount sold.The variable and fixed costs of a product or period of time make up the total costs.
Mass customization costs $60, plus $18 and $12.
How does net profit work?The amount your business makes after deducting all operating, interest, and tax costs over a given time period is called net profit.You will need to know a company's gross profit in order to arrive at this value.
How is net profit calculated?
Gross profit minus operating costs and taxes is net profit.It can also be thought of as total income less all costs.
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sandy and jim are trying to decide on whether to buy cash-value life insurance. one factor that makes them weary of cash-value life insurance is
These policies are relatively expensive, Cash value life insurance is a type of permanent life insurance that includes a cash value savings component and lasts for the entirety of the policy holder's life.
Is cash value life insurance a wise financial decision?Financial advisors do not advise investing in cash-value life insurance unless you have prepared for emergencies and other urgent needs, have maxed out contributions to tax-advantaged retirement accounts, such as IRAs and 401(k)s, and are willing to commit to a policy for the long term.
What happens if you withdraw life insurance's cash value?The policy will be canceled if all funds are withdrawn. While taking money out of the policy may make sense in some situations, it may reduce the benefit that is provided to your dependents after you pass away. Also possible is a surprise tax charge.
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true or false: when a company enters a market on a large scale, it would be common for potential competitors to decide against entering that market.
The assertion is accurate.
What is the phrase used when a business enters a market before its rivals?A first mover is a service or product that, by being the first to market with a product or service, acquires a competitive advantage. Being the first usually allows a business to build significant brand awareness and customer loyalty before rivals enter the market.
What is the process of a business entering a new market called?When a business enters a market where competing or similar products already exist, this is known as market penetration. Getting the clients of your rivals is one approach to do this (part of their market share).
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which type or types of inventory timing system requires the user to record two journal entries every time a sale is made.
According to the claim, a perpetual inventory timing system necessitates that the user enter two journal entries for each transaction.
What are commercial sales?Business Sales refers to the in-home sale of Company Products by the Company or its Affiliates. Business Sales refers to sales made while conducting business, and (ii) GAAP must be followed when determining whether a corporate sale has already been completed before or after the closing.
What is a job in sales?Presenting and marketing products and services prospective potential consumers is a part of the sales profession. You are frequently responsible for generating leads and hitting sales goals when working in sales.
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harry is selling his rare coin collection through marshall auction house. harry will not sell the collection for less than $300,000 and has the right to withdraw the collection if the highest bid is less than the $300,000 minimum. who is the offeror in this auction? a. harry b. the auctioneer c. the people who make bids d. the final buyer
C. The people who make bids.
Why do you say "auction"?
In an open or closed style, an auction is a sales event where prospective buyers submit competing bids on goods or services. Because buyers and sellers think they will get a good deal when purchasing or selling assets, auctions are popular. There are four types of auctions: (1) the open, oral, or English ascending-bid auction; (2) the Dutch descending-bid auction; (3) the first-price, sealed-bid auction; and (4) the Vickrey second-price, sealed-bid auction.
What does purchasing at an auction mean?An auction building is often where traditional auctions take place. All potential purchasers will be there, and they will all present bids to one another. On the auction day, if you place the highest bid, you exchange contracts and hand over your deposit.
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jounralize and post closing entries and complete the closing process list all debit entries before credit entries credit account titles are authomatically indented when the amount is entered
Preparing closing entries, which involves journalizing and uploading the entries to the ledger, is the eighth phase in the accounting cycle. During closure, there are four entries. To the Income Summary account, the initial entry cancels revenue accounts.
What order should the steps for closing an account be taken in?Following is the basic order of closing entries: Clear the balances in the revenue accounts by debiting each revenue account and crediting the income summary account. To eliminate the balances in all expenditure accounts, credit all expense, accounts and debit the revenue summary account.
A journal entry debiting all revenue accounts and crediting the income summary is used to accomplish this. The same procedure is then used to calculate expenditures. Crediting the expense accounts and debiting the income summaries closes out all expenditures.
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When consumers are satisfied with a product, like the brand, and are committed to further purchases, a company has achieved a certain degree of _ for its product
A business has realized a specific level of profit for its product when customers are pleased with it, enjoy its brand, and thus are committed to making additional purchases.
What called consumer?Consumers are those who buy products for their own needs and use or consume them. Although a customer may resell the good, product, or service, he or she may use it to support himself or himself and engage in self-employment. Describe a consumer. The person who uses the goods or services on a daily basis is the consumer.
Who is a consumer with examples?Consumers are those who buy goods or services for their own consumption rather than for manufacturing or resale. A customer is someone who makes purchasing decisions.
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Creating compelling visuals for presentations requires people to learn what new tools?.
Creating compelling visuals for presentations requires people to learn new tools such as templates, fonts, shapes, charts, graphs
Visuals of a presentation are all the graphics that are included in a presentation in order for a presentation to be made to look more understandable and reader-friendly.
Any data present inside the presentation is supported through pictures, charts, and graphics as visuals that are compelling. The font, writing styles and templates are chosen according to the theme of the presentation that will make the reader more compelled towards the slides of the presentation visuals.
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if a stock's market price exceeds its intrinsic value as seen by the marginal investor, then the investor will sell the stock until its price has fallen to the level of the investor's estimate of the intrinsic value.
A stock is considered to be overvalued if its intrinsic value is much lower than its current market price.
What happens if a stock's intrinsic worth exceeds its market value?
1) When intrinsic value exceeds market price, it indicates that a company is undervalued and presents a buying opportunity to investors. 2) The stock is overvalued and is not a viable investment at the moment when Market Price exceeds Intrinsic Value.
What is the share market's intrinsic value?A stock's intrinsic value represents its genuine worth. This is estimated based on the expected financial gain you would experience from it in the future. In other words, it is the highest price at which you may purchase the item without suffering a loss.
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You have checked model income statements and estimate your payroll expense will be 30% of revenue. You expect sales to be $6,000 per week. What should you budget annually for payroll?.
You have checked model income statements and estimate your payroll expense will be 30% of revenue. You expect sales to be $6,000 per week. should you budget annually for payroll $93,600
What exactly is an income statement?An income statement displays a company's revenues, costs, and profitability over time. It may also be referred to as an earnings statement or a profit-and-loss (P&L) statement. It displays your: revenue from the sale of goods or services. costs associated with producing income and running your business.
What does it mean to process payroll?Payroll processing involves paying workers for their labor. It entails figuring out total wage earnings, deducting deductions, filing payroll taxes, and disbursing money.
What is a payroll example?Gross salary, commissions, bonuses, and wages. Taking employee and employer taxes into account. Salary deductions, insurance costs, and contributions to savings schemes. expenditures for employer fringe benefits.
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d. suppose the expected spot rate in 180 days is $0.67/sfr with a most likely range of $0.64-$0.70/sfr. should american hedge? what factors should enter into its decision?
The American Airlines will be better suited to deferring the conversion of its ticket sales at the upcoming spot rate given the likely range of anticipated 180-day spot rate. The decision would depend on whether operating an innovative airline has a comparative advantage over trying to outguess the financial markets.
How is a spot rate calculated?The discount rate that brings the present value (PV) of a zero-coupon bond to its price is used to determine the spot rate. These are predicated on forecasted interest rate possibilities. Therefore, spot rates might employ a range of interest rates up until maturity.
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what is one of the reasons noted in our textbook that print versions of employee publications will continue to be used?
Many readers adore the feel of print versions of books as a physical object. You can feel the paper, turn the pages, and hold it.
What benefits do printed books offer?1. More information is taken in. 2. Additionally, they aid kids in improving their reading skills. 3. They are simpler on the eyes. 4. You are less inclined to become sidetracked. 5. You may get better sleep thanks to these. 6. Home libraries are associated with better academic performance. 7. They increase the enjoyment of reading.
Why are physical books superior to e-books?Numerous studies have shown that physical books are preferable to eBooks for improving reading comprehension. Younger readers might read more quickly on an eReader, but real books are typically preferred because of their pace and the possible distractions of links, scrolling, and adverts.
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when groups of workers receive a portion of the financial return from reducing costs and improving productivity, this is called:
Labor productivity is defined as real output per labour hour, and the change in this ratio over time is used to measure labour productivity growth.
Productivity increases have historically resulted in higher real income, lower inflation, and higher corporate profitability. A company that increases output while working the same number of hours is likely to be more profitable, which means it can raise wages without passing the cost on to customers. Our output metric is gross value added (GVA), and our labour input metric is workers. Productivity is a measure of how well a company converts inputs like labour and capital into outputs like products and services.
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your client is concerned about the high costs of ongoing mortality and expense involved in some variable annuity contracts, to help minimize the mortality and expense charges, you recommend a -shares, b-shares, c-shares, l-shares
This rule's objective is to safeguard consumers and promote financial stability by setting rules for the disclosure of specific minimum information concerning annuity contracts.
What do the terms mortality and expenditure charge and annuity mean?Investors in annuities and other insurance company-offered products are subject to a cost known as a mortality and expense risk charge. It pays the insurer any damages it could incur as a result of unforeseen circumstances.
What bears the expense of the death benefit of a variable annuity?Each variable annuity includes a Mortality and Expense fee (M&E) that is used to pay for the death benefit. 1.25% of the account value is the standard M&E fee. According to the insurance provider and the product, the fee may, of course, be more or lower.
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what skills, qualities, and qualifications should applicants highlight in their résumés for the technical trainer position? check all that apply. accounting and bookkeeping experience curriculum design experience technology and software training experience master’s degree in instructional design public relations and marketing expertise
The skills, qualities and qualifications that an applicants must highlight in their résumés for the technical trainer position includes:
B. experience curriculum designC. experience technology and softwareD. training experienceE. master’s degree in instructional designF. public relations and marketing expertiseWhat is the role of technical trainer?Most time, the role of a technical trainers is to develop curriculums that are designed to promote computer literacy within companies. A technical trainers will often devise such programs based on the existing skill sets and duties of employees.
Some of the responsibility of a technical trainer in a firm includes:
Identifying role of computers in employees' day-to-day work.Formulating skills alignment tests to establish a baseline for each employee.Detecting of common skills shortages and creating training plan to address these.Preparing of requisite manuals and handouts ahead of training sessions.Conducting training to promote employees' computer skills.Recording attendance at and engagement in classes.Conducting assessments to confirm whether employees' computer skills have improved.Read more about technical trainer
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as country incomes rises, what would you generally expect to happen to the burden of noncommunicable diseases as a share of the total disease burden?
As the country incomes rises, we would want to expect that the burden of noncommunicable diseases as a share of the total disease burden should go down.
What is a Noncommunicable diseases?A noncommunicable diseases means the group of conditions that are not mainly caused by an acute infection which often result in long-term health consequences and often create a need for long-term treatment and care. This type of diseases includes heart disease, stroke, cancer, diabetes and chronic lung disease which are collectively responsible for 74% of all deaths worldwide.
When a country incomes rises, the quality of life and standard of living should increases, hence, the burden of noncommunicable diseases is expected to go down.
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based on this information alone, what are the amounts of total liabilities that would appear on riley's december 31 balance sheets for year 1 and year 2, respectively?
B) $37,890 and $0.are the amounts of total liabilities that would appear on riley's december 31 balance sheets for year 1 and year 2, respectively.
What do you mean by liabilities?Liability typically denotes your responsibility for something, but it can also imply that you owe someone money or services. A homeowner's tax obligation, for instance, may be the amount of property taxes due to the city or the amount of income tax due to the federal government. Equity reflects the ownership position that shareholders have in a firm, whereas liabilities are the debts or obligations that a corporation owes to other parties. This is the main distinction between equity and liabilities. Liabilities are subtracted from assets to calculate equity.
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derek bought a pick-up truck to transport his equipment to fishing tournaments. he also bought a pick-up for his lawn maintenance business. his purchases were:
In a situation wherein Derek bought a pickup truck to transport his equipment to fishing tournaments, and a trailer for his lawn maintenance business, then his purchases were B2C and B2B, respectively.
B2C and B2B are the two types of business transactions performed by a business firm in order to operate the marketing and selling of its goods. Buying a pick-up truck for transport of equipment is a B2C, i.e., Business-To-Consumer transaction, and the purchase of lawn maintenance business is a Business-to-Business, or simply a B2B transaction.
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Assume Durango Co. has sales of $100,000 for the month of November. The company expects sales to grow 10% each month. Durango Co. collects 60% of sales in the month of sale and 40% in the month after sale. What should Durango Co. project for cash collections in December?
$106,000--December sales = $110,000 (November sales of $100,000 X 1.1) Cash Collections for December:
November sales $100,000 X 0.4 = $40,000 December sales = $110,000 X 0.6 = $66,000
Total Collections = $40,000 + $66,000= $106,000
How do sales work?Sales are activities involved in selling or the quantity of products that are sold within a specified time frame. It is also seen as a sale when a service is provided for a fee. As a result of an acquisition, appropriation, requisition, or direct contact with the customer at the point of sale, the seller or provider of the goods or services completes a transaction. The transfer of title (property or ownership) of the object occurs, and the price is settled once a price has been agreed upon for which the transfer of ownership will take place. The sale is often executed by the seller rather than the buyer, and it is sometimes done before the buyer needs to make a payment.
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Stock in Cheezy-Poofs Manufacturing is currently priced at $65 per share. A call option with a $65 strike and 90 days to maturity is quoted at $3.25. Compare the percentage gains and losses from a $21,125 investment in the stock versus the option in 90 days for stock prices of $55, $65, and $75. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Leave no cells blank - be certain to enter "0" and select "None" wherever required. Input all amounts as positive values. Omit the "%" sign in your response.)
Options % Gain/Loss Stock % Gain/Loss
$55 $65 $75
The percentage gains and losses from a $21,125 investment in the stock versus the option in 90 days for stock prices of $55, $65, and $75
If you buy stock, your investment's % return is only the stock's percentage change between now and 90 days from now.
Return on investment equals (60 - 65) / 65, = -7.69% when the price is 60 in 90 days. ROI equals (65 - 65) / 65, = 0% when the price is 65 in 90 days.
If you decide to buy a call option in this scenario, your investment profit would be equal to the option's payoff less its 3.25 purchase price.
Price reaches 60 in 90 days, the option is not exercised, and the net profit is equal to 0 - 3.25, or -3.25. ROI is equal to -3.25 / 3.25, which is 100%. The price drops to 65 in 90 days, the option is not exercised, and the result is a net loss of -3.25 percent. ROI is equal to -3.25 / 3.25, which is 100%.
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while contracting with celebrities to endorse the company’s brand adds to the competitive power of its product offering vis-a-vis the offerings of rivals, one of the big risks in trying to outbid rivals to win celebrity endorsements is:
While contracting with celebrities to endorse the company’s brand adds to the competitive power of its product offering vis-a-vis the offerings of rivals, one of the big risks in trying to outbid rivals to win celebrity endorsements is: that it is hard to come up with a reliable estimate of the size of the sales volume/revenue/ profit payoff associated with signing a celebrity and thus avoid bidding more than the celebrity’s endorsement is worth”.
What is meant by celebrity endorsements?A celebrity's fame and reputation are used to promote a brand or product through celebrity endorsement, sometimes referred to as celebrity branding or celebrity advertising. Nonprofit groups that exploit a celebrity's fame to promote a cause or collect money for it are examples of other use cases.
H.E.R. promoting L'Oreal Paris' hair and makeup products through commercials and other marketing materials is an example of a celebrity endorsement.
While hiring celebrities to promote a company's brand increases its product's competitiveness against that of competitors, one of the major hazards of trying to outbid competitors for celebrity endorsements is that it is difficult to develop a solid assessment
Read more on endorsements here: https://brainly.com/question/857496
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