Investment in the new marketing campaign

Assignment Help Finance Basics
Reference no: EM13847953

Watson Corporation plans to invest in a new marketing campaign. The cost of the campaign is $675,000. If the investment is made, Watson expects additional sales for the next four years, resulting in the following additional cash flows to the firm:

Year 1: CF = $245,000
Year 2: CF = $265,000
Year 3: CF = $280,000
Year 4: CF = $285,000

Watson requires projects of this type to provide a 13% return and meet the target AAR of 30%. The firm's maximum payback period is 2.25 years.

Calculate each of the following for the firm:

  • Payback period
  • Average rate of return
  • Net present value
  • Benefit-cost ratio
  • Internal rate of return

For each of the above figures of merit, explain whether the firm should accept or reject the project. Given the results of your analysis, should Watson Corporation make the investment in the new marketing campaign? Why or why not?

Reference no: EM13847953

Questions Cloud

Discuss the role of ethics in gathering competitive data : discuss The role of ethics in gathering competitive data and The role/s within an organization that bear responsibility to ensure ethical behavior when conducting external organizational analysis.
Identify how the principles of motivation will be applied : Clarify the salient roles of the supervisor who draws from an empowerment approach to achieve organizational effectiveness - Identify how the principles of motivation will be applied in an empowerment environment.
General information about george washington : Specific purpose: General information about George Washington. Thesis statement: George Washington was an important American revolutionary who left behind a great legacy
Television program that contains a social inequality : A television program that contains a social inequality or social class theme (e.g. racism, sexism, social class categories)?
Investment in the new marketing campaign : For each of the above figures of merit, explain whether the firm should accept or reject the project. Given the results of your analysis, should Watson Corporation make the investment in the new marketing campaign? Why or why not?
How does petco compete with petsmart : How does Petco compete with PetSmart and other pet food stores, and how does the company's competitive strategy relate to its internal analysis?
Implement a modified version of the card game war : Implement a modified version of the card game WAR
Calculate your grades based on the number of points you get : Create a program that calculates your grades based on the number of points you accumulate over the entire semester
Project risk requirement : The management of risk is proving to be one of the most difficult tasks for the project management profession. How can risk be managed effectively and who should be responsible for this task?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Gold stock market average return 8 20 standard deviation 25

you are in a world where there are only two assets gold and stocks. you are interested in investing your money in one

  Computation of weights of the individual stocks

Computation of Weights of the individual stocks, Expected returns, Variance-covariance matrix and volatilities

  Miller is evaluating a plan to brew and market a new porter

miller is evaluating a plan to brew and market a new porter beer in europe. the new beer will be test marketed for 1

  The chadmark corporation''s budgeted monthly sales

4. (TCO G) The Chadmark Corporation's budgeted monthly sales are $3,000. In the first month, 40% of its customers pay and take the 2% discount.

  What is the net advantage to leasing

Under either the lease or the purchase, Waldrop Corporation must pay for insurance, property taxes, and maintenance. What is the net advantage to leasing (NAL)?

  What do you expect the price of these bonds

Bond X is a premium bond making annual payments. The bond pays an 8 percent coupon, has a YTM of 6 percent, and has 13 years to maturity. Bond Y is a discount bond making annual payments.

  Justification behind verizon dividend policy

From the e-Activity, infer the justification behind Google's dividend policy. Next, infer the justification behind Verizon's dividend policy. Provide a rationale for your response.

  Explain what is the operating cash flow

Explain what is the Operating Cash Flow and Show your calculations

  Finance based objective problems

How should a "gain" from the sale of treasury stock be reflected when applying the cost method of recording treasury stock transactions?

  Computation of degree of combined leverage

Computation of Degree of operating leverage and financial leverage & combined leverage and EPS if sales level declined.

  A couple has up to 30000 to invest in mutual funds the

a couple has up to 30000 to invest in mutual funds. the broker recommends investing in two funds based on their average

  Find the expected gainloss from forward hedging if you were

dell computers sold a super computer to the institute in italy on credit and invoiced euro5 million payable in six

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!

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