Product research-advertising and sales promotion

Assignment Help Financial Management
Reference no: EM131025642

Ronald Thump is interested in expanding his firm. After careful consideration, he has determined three areas in which he might invest additional funds: (1) product research and development, (2) manufacturing operations improvements, and (3) advertising and sales promotion. He has $500,000 available for investment in the firm. He can invest in its advertising and sales promotion program every year, and each dollar invested in this manner is expected to yield a return of the amount invested plus 20% yearly. He can invest in manufacturing operations improvements every 2 years, with an expected return of the investment plus 30% (at the end of each 2-year period). An investment in product research and development would be for a 3-year period, with an expected return of the investment plus 50% (at the end of the 3-year period). To diversify the total initial investment, he wishes to include the requirement that at least $30,000 must be invested in the advertising and sales promotion program, at least $40,000 in manufacturing operations improvements, and at least $50,000 in product research and development initially (at the beginning of the first year). Ronald wants to know how much should be invested in each of the three alternatives, during each year of a 4-year period, to maximize the total ending cash value of the initial $500,000 investment. a. Formulate a linear programming model for this problem. Make sure you show the formulation. b. Solve the model by using the computer. Have to put this in excel solver.

Reference no: EM131025642

Questions Cloud

The provisions of the divorce decree and obligations : Stan and Anne were divorced in January 2015. The provisions of the divorce decree and Anne’s obligations follow: Transfer title in their resort condo to Stan. At the time of the transfer, the condo had a basis to Anne of $75,000, a fair market value ..
Find expected value of builder cost due to waiting supplies : After 2 days, however, the cost of the delay is $100 plus $20 per day (prorated) for each additional day. That is, if the waiting time is 3.5 days, the cost of the delay is $100 + $20(1.5) = $130. Find the expected value of the builder's cost due ..
Use the basic integration rules to find the integral : Use the basic integration rules to find or evaluate the integral. 1. 1∫e ln?(2x)⁄x dx; 2. ∫2x⁄((x-3)) dx; Use Integration by parts to find the indefinite integral. 3. ∫ x2  sin?(2x) dx; 4. ∫x√(x-1) dx.
Find the mean and variance of c : The length of time Y necessary to complete a key operation in the construction of houses has an exponential distribution with mean 10 hours. The formula C = 100 + 40Y + 3Y 2 relates the cost C of completing this operation to the square of the tim..
Product research-advertising and sales promotion : Ronald Thump is interested in expanding his firm. After careful consideration, he has determined three areas in which he might invest additional funds: (1) product research and development, (2) manufacturing operations improvements, and (3) advertisi..
What is the largest value of the standard deviation of y : A machine used to fill cereal boxes dispenses, on the average, μ ounces per box. The manufacturer wants the actual ounces dispensed Y to be within 1 ounce of μ at least 75% of the time. What is the largest value of σ, the standard deviation of Y ,..
For treasuries-there is only one spot yield curve : For Treasuries, there is only one spot yield curve that tells you rates for all possible maturities of Treasury loans starting today. How many Forward curves can you have today? One or more? Why?
Spot curve when the spot yield curve is upwardly sloping : If you fix the loan length (one year maybe) and then calculate all forward rates using that time interval, that is f(0,1,2), f(0, 2, 3), f(0, 3, 4) and so on and plot the resulting forward yield curve against the spot curve, why is the forward curve ..
What is the equilibrium level of gdp in this economy : What is the equilibrium level of GDP in this economy? Are inventories increasing or decreasing when GDP is 4,000? 2,000? By how much are they changing

Reviews

Write a Review

Financial Management Questions & Answers

  Using the straight-line method

Please show/explain work. Scott Investors, Inc, is considering the purchase of a 412,000 computer with an economic life of 5 years. The computer will be fully depreciated over five years using the straight-line method.

  What he will earn by paying taxes prior to deposit

Timothy Clum is in the 25 percent tax bracket and is considering the tax consequences of investing $2,000 at the end of each year for 30 years, assuming the investment earns 8 percent annually. What is the amount of earnings that Timothy gives up by ..

  What is the expected return on the portfolio after purchase

Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio.  Company D's has an expected return of 9.0% and a beta of .75. The total value of the inv..

  What is the yield to maturity of five-year

What is the yield to maturity of a five-year, $5000 bond with a 4.5% coupon rate and semi annual coupons if this bond is currently trading for a price of $4876?

  What is the required rate of return on your investment

Bond Y is no callable, has 10 years to maturity, a 8% annual coupon, and a $1,000 par value. If you buy it, you plan to hold it for 4 years. You and the market have expectations that in 4 years the yield to maturity on a 6-year bond with similar risk..

  How much long-term debt does blackwell automotive have

Tim Dye, the CFO of Blackwell Automotive, Inc., is putting together this year's financial statements. He has gathered the following balance sheet information: The firm had a cash balance of $23,015, accounts payable of $163,257, common stock of $313,..

  What is the yield to call of the bond

A 5.10 percent coupon bond with 15 years left to maturity can be called in three years. The call premium is one year of coupon payments. It is offered for sale at $1,060.30. What is the yield to call of the bond?

  Intensive care urology practice not-for-profit business

Intensive Care Urology Practice (ICUP), a not-for-profit business, had revenues in 2015 of $144,000. Expenses other than depreciation were 75% of revenues and Depreciation was $15,000. Construct ICUP’s Income Statement. What was ICUP’s Cash Flow for ..

  Dollar growth-how was the growth financed

Middleton Clinic had total assets of $500,000 and an equity balance of $350,000 at the end of 2010. One year later, at the end of 2011, the clinic had $575,000 in assets and $380,000 in equity. What was the clinic’s dollar growth in assets during 201..

  What was payout ratio for fiscal year

Delta Corporation earned $2.50 per share during fiscal year 2011 and paid cash dividends of $1.00 per share. During the fiscal year that just ended on December 31, 2012, Delta earned $3.00 per share and the firm's managers expect to earn this amount ..

  Interest rates reflect effect of six different things

1.Demonstrate that bond yields and interest rates reflect the effect of six different things. 2. Explain how each of these concepts influence investors: expected future inflation, interest rate risk, default risk, taxability and lack of liquidity

  The beginning of the current fiscal year

The capital accounts of Hogan and Moss have balances of $90,000 and $65,000, respectively on January 1, 2011, the beginning of the current fiscal year.  Prepare a statement of partners' equity for 2011 for the partnership of Hogan and Moss. If an amo..

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