Reference no: EM13915310
1. WordMath is a new type of software that allows users to do symbolic mathematicl analysis (such as calculus) from within word processing software. There are two versions of the software: (i) a basic version and (ii) an advanced version. The advanced version provides more functions than the basic version. Both versions cost the same to manufacture and market. These costs are $30/unit.
Available marketing research data give the following segment characteristics.
Scientists and Engineers in manufacturing firms: Segment size is 1.2 million. Their willingness-to-pay (WTP) for the basic version is $350 and for the advanced version the WTP is $400.
Consulting and design firms: Segment size if 900,000. Their WTP for basic version is $385 and or the advanced version is $440.
Assume that the willingness-to-pay valuations include the effects of competition; each consumer needs only one product; and all consumer buy the product that gives them the highest net value (WTP minus price paid).
(a) If WordMath can sell only one version of the product, which version should it sell and at what price?
(b) If WordMath can sell both products should it sell both products? If it sells both products what prices should it charge? Be clear about which segment will buy which product.
2. The following table contains data from a survey looking at the importance of various attributes of laptops.
|
Configuration
|
Hard Disc
|
Brand
|
Price
|
Processor
|
Warranty (years)
|
Rank
|
|
1
|
80
|
Dell
|
2100
|
AMD
|
1
|
13
|
|
2
|
80
|
Philips
|
2800
|
AMD
|
2
|
11
|
|
3
|
80
|
Lenovo
|
3500
|
Intel
|
1
|
17
|
|
4
|
140
|
Dell
|
2800
|
Intel
|
2
|
2
|
|
5
|
140
|
Philips
|
3500
|
AMD
|
1
|
14
|
|
6
|
140
|
Lenovo
|
2100
|
AMD
|
1
|
3
|
|
7
|
100
|
Dell
|
3500
|
AMD
|
2
|
12
|
|
8
|
100
|
Philips
|
2100
|
Intel
|
1
|
7
|
|
9
|
100
|
Lenovo
|
2800
|
AMD
|
1
|
9
|
|
10
|
80
|
Dell
|
3500
|
Intel
|
1
|
18
|
|
11
|
80
|
Philips
|
2100
|
AMD
|
2
|
8
|
|
12
|
80
|
Lenovo
|
2800
|
AMD
|
1
|
15
|
|
13
|
140
|
Dell
|
2100
|
AMD
|
1
|
4
|
|
14
|
140
|
Philips
|
2800
|
Intel
|
1
|
6
|
|
15
|
140
|
Lenovo
|
3500
|
AMD
|
2
|
5
|
|
16
|
100
|
Dell
|
2800
|
AMD
|
1
|
10
|
|
17
|
100
|
Philips
|
3500
|
AMD
|
1
|
16
|
|
18
|
100
|
Lenovo
|
2100
|
Intel
|
2
|
1
|
These numbers represent a representative customer's ranking of varios product configurations. For example, configuration 1 is a Dell laptopwith an 80G hard drive, priced at $2100, with an AMD processor, and a 1 year warranty. This laptop was rated 13 our of 18 conigurations. Note, a 1 represents the highest rated laptop - that is configuration 18 was rated highest.
Based on these data we have to figure out the relative importance of various attributes. In order to do this run the following regression:
Rank = a1 + b1*Brand + b2*HardDisc + b3*Price + b4*Processor + b5*Warranty.
In this regression, use dummy variables for all the variables.
a. What is more important - warranty or the processor inside the computer? Why?
b. What is the most highly rated brand name?
c. What is the Dell Brand worth (in dollars) in this market?
d. Run another regression with price as a continuous variable. Does this change Dell's $ value?
|
Recapture of net working capital at the end of project
: The recapture of net working capital at the end of a project will A. increase terminal year free cash flow by the change in net working capital times the corporate tax rate OR B. increase terminal year free cash flow OR C. decrease terminal year free..
|
|
Discuss the country''s gdp
: REQUIREMENT:Have you ever heard a one-hundred-year-old novel Around the World in 80 Days by Jules Verne (1828 - 1905)? Now close your eyes and dream the county in the world (e.g., six continents - North America, South America, Europe, Africa, Asia, a..
|
|
Increase tax shield without changing the firm size
: AP Corp has a WACC of 12%. The firm has a D/E ratio of .2. The cost of debt is 6%. Tax rate is 40%. Because of the profit has been growing in the last 3 years, the firm is considering increasing the tax shield. a. What can AP Corp do to increase tax ..
|
|
Assume tax rate-debt-current price-semiannual coupon payment
: Calculate the WACC based on the following information. Assume tax rate is 35%. Debt: $10M face value, current price $10.8M, 6.4% coupon rate, 25 years to maturity, semiannual coupon payment. (Hint: cost of debt is YTM of the bond) Equity: 495,000 sha..
|
|
What is the most highly rated brand name
: What is more important - warranty or the processor inside the computer? Why and What is the most highly rated brand name?
|
|
What is the per share par or stated value of the common
: Divide the class in three sections and divide each section into groups of three to five students. Assign each section one of the companies. Group Tasks Based on the company assigned to your group, answer the following questions: What is the per share..
|
|
Montana is a partnership with two partners
: Montana Company was started on January 1, 2013, when it acquired $50,000 cash from the owners. During 2013, the company earned cash revenues of $25,000 and incurred cash expenses of $16,200. The company also paid cash distributions of $5,000.
|
|
What is the cost of equity-what is the cost of debt
: Fyre Inc has a D/E ratio of 0.85. Its WACC is 9.9%, and the tax rate is 35%. a. If the company’s cost of equity is 14%, what is the cost of debt? b. If instead you know that the cost of debt is 10.5%, what is the cost of equity?
|
|
Compute the inventory turnover and days inventory on hand
: During 2014, Victoria's Fashion had beginning inventory of $480,000, ending inventory of $560,000, and cost of goods sold of $2,200,000. Compute the inventory turnover and days' inventory on hand.
|