Answer:
Pros: Use of singe hurdle rate saves time in the evaluation of projects which results in prompt decision making.
Cons: Company may reject good projects and accept bad ones due to the assumptions underlying WACC use in capital budgeting.
Explanation:
Pros of using WACC: The use of WACC implies that the company uses a single hurdle rate for all projects, which simplifies the decision making and saves time when evaluating projects
Cons of using WACC: Use of WACC assumes that there is no change in capital structure i.e all projects are financed in exactly the same way and all projects have the same risk . These assumptions may lead to the company rejecting good projects and accepting bad ones. For example the company may accept a high risk project with a return of 14% when the minimum return that should be accepted according to the high risk divisional WACC is 16%. Likewise, the company may reject a low risk project with a return of 11%, when it is in fact a good project whose minimum return should be 8% as per the low risk divisional WACC.
Answer: Missionary marketing is indirect selling. The salesperson provides the information about the product and tries to influence the buying decision.
Explanation: This marketing strategy is used to convince a person who is new to the product or has never used the product. The motive is to influence than direct sale. The salesperson is known as Detailer. Here Tender Love is practicing the same marketing strategy.
Answer:
PV of lease annuity is $25000
Explanation:
As the paymengt will be made at the end of the year, the annuity is an ordinary annuity. We will calculate the present value of the ordinary annuity using the following formula,
PV Annuity = PMT * [( 1 - (1+r)^-n) / r]
Where,
- PMT is periodic payment
- r is discount rate per peiod
- n is number of periods
Thus,
PV of annuity = 3895.5 * [( 1 - (1+0.09)^-10) / 0.09]
PV of annuity = $24999.985 rounded off to $25000
Answer:
c. Sparkling water, evening wine tasting, four-star hotel restaurant
a. You need to convince your coworkers to adopt a new software program that they don’t understand.
b. You need to fire your receptionist.
c. You are sending a past-due notice on an account.
Explanation:
In the first question, sparkling water, even tasting wine and four star hotel restaurant are all specific categories that fall under some of the items in the foregoing scratch list example food and drink and $100/night four star rooms
In the second question, manager use indirect strategies in communicating information that may be perceived as bad news to the employees in such a way as to reduce the negative psychological effect it may have on them. Example firing your receptionist is bad news to her and would have to be communicated indirectly by first offering an explanation and putting the main idea towards the end of the message
