User Account

All Pages

Calculate the payback period for the advertising program

Assignment Help Accounting Basics
Reference no: EM133115472

Question - Capital Investment Decisions - Zara Ltd.'s management is considering an advertising program that would require an initial expenditure of $136,500 and bring in additional sales over the next ?ve years. The projected additional sales revenue in year 1 is $80,000, with associated expenses of $15,000. The additional sales revenue and expenses from the advertising program are projected to increase by 10 per cent each year. Ignore company income taxes. Present value tables are provided at the end of the exam.

Required -

a) Calculate the payback period for the advertising program.

b) Calculate the advertising program's net present value, assuming a required rate of return of 9 per cent.

c) For strategic projects the NPV maybe negative therefore It should not be used for analysing projects of strategic nature. Do you agree? Explain this statement.

Reference no: EM133115472

Questions Cloud

Find the estimated total fixed costs for the coming month : ABC Company estimates the following data for the coming month - Total variable costs $40,000.00. Find the estimated total fixed costs for the coming month
Why mncs may invest or divest funds : Explain the rationale both from theoretical and practical perspective of why MNCs may invest or divest funds in a financial market outside its own country. Supp
How financial planning helps you in the future : 3. Create a monthly budget plan. You may adopt a monthly budget sheet online or create your own
What is the stock fair present value : The stock paid a dividend of $7 last year, and the required rate of return on the stock is 11 percent. What is the stock's fair present value?
Calculate the payback period for the advertising program : he projected additional sales revenue in year 1 is $80,000, Calculate the payback period for the advertising program
Discuss the adverse selection problem : -Discuss why mortgage prepayment is a concern to holders of mortgage passthrough securities. Discuss the different models that have been used to estimate the pr
What is the company cost of equity : Countess Corporation is expected to pay an annual dividend of $4.51 on its common stock in one year. The current stock price is $73.07 per share.
What was your dollar return and percent return : FedEx Corp stock ended the previous year at $103.39 per share. It paid a $0.35 per share dividend last year. What was your dollar return and percent return
What is the company aftertax cost of debt : Galvatron Metals has a bond outstanding with a coupon rate of 5.7 percent and semiannual payments. The bond currently sells for $943 and matures in 19 years. Th

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd