How would you value goodwill that is obtained in this way

Assignment Help Financial Management
Reference no: EM131308024

Sometimes, a bidder on a work contract may bid lower than what would maximize his/her profit from the contract and the reason for that is to create goodwill (to increase expected future business from the buyer). How would you value the goodwill that is obtained in this way?

Guided Response:

Think about an example that pertains to you. If there is expected goodwill would you be prepared to bid lower to get a contract? Explain your reasons. In 300 words or more, please, provide your response to the above discussion question.

Reference no: EM131308024

Questions Cloud

Bonds make annual payments : Lycan, Inc., has 7.6 percent coupon bonds on the market that have 9 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the YTM on these bonds is 9.6 percent, what is the current bond price?
About the nonconstant growth stock valuation : Assume that the average firm in your company's industry is expected to grow at a constant rate of 7% and that its dividend yield is 5%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&..
Federal reserve and president of the united states : Which of the following best describes the relationship between the Federal Reserve and the President of the United States (POTUS)?
In order to live my desired life style : In order to live my desired life style, I have determined that the value of my retirement portfolio must double. Assuming that there are no further contributions to my portfolio and that , for the foreseeable future, I can earn a 4% annual return on ..
How would you value goodwill that is obtained in this way : Sometimes, a bidder on a work contract may bid lower than what would maximize his/her profit from the contract and the reason for that is to create goodwill (to increase expected future business from the buyer). How would you value the goodwill that ..
Planning to buy mountain chalet : In 10 years you are planning to buy a mountain chalet. The chalet you want currently costs $100,000 and is expected to increase in value each year at a rate of 2.5 percent. If you can earn 10% annually on your investments, how much must you invest at..
What is your compound annual rate of return : Suppose that you are offered an investment that will cost $898 and will pay you interest of $70 per year for the next 20 years. Furthermore, at the end of the 20 years, the investment will pay $1,000. If you purchase this investment, what is your com..
Coupon paying bonds make annual coupon payments : Josh Kavern bought 10-year, 11.1 percent coupon bonds issued by the U.S. Treasury three years ago at $912.58. If he sells these bonds, for which he paid the face value of $1,000, at the current price of $849.29, what is his realized yield on the bond..
The market interest rate for similar investments : Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 7.86 percent. Assume annual coupon payments. What is the current value of this bon..

Reviews

Write a Review

Financial Management Questions & Answers

  What must the coupon rate be on the bonds

Page Enterprises has bonds on the market making annual payments, with eleven years to maturity, and selling for $982. At this price, the bonds yield 7.60 percent. What must the coupon rate be on the bonds?

  Calculate cost of common equity financing using gordon model

Last year the Black Water Inc. paid dividends $2.92. Company's dividends are expected to grow at an annual rate of 3% forever. The compnay's common stock is currently selling on the market for $86.52. The investments banker will charge flotation cost..

  Value of bond based on market price of the common stock

Given the following information concerning a convertible bond: What is the current yield of this bond? What is the value of the bond based on the market price of the common stock? What is the value of the common stock based on the market price of the..

  The annual continuously compounded

The annual continuously compounded 6-month and 1-year zero rates are 3% and 4%, respectively. A 1.5-year bond that pays coupons of $2 every six months currently sells for $98.52. What is the 1.5-year zero rate with continuous compounding? Show the ca..

  Calculate the charge necessary to cover cost

Next year Holyspirit healthcare organization will serve 100 patients in the following manner. Calculate the charge necessary to cover ABC’s cost

  What is weighted average cost of capital

Martin Corporation is financed with 40% debt and 60% common equity. The after tax cost of debt is 10% and the cost of common equity is 14%. What is Martin’s weighted average cost of capital? Instead, assume that the restructuring is completed and Mar..

  Reason for holding cash and cash equivalents

What is the reason for holding cash and cash equivalents? And which hybrid security has special claims on a corporation's profits or incase of liquidation of corporate assets?

  Purchased land-building-equipment from laguna corporation

Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $919,800. The estimated fair values of the assets are land $175,200, building $642,400, and equipment $233,600. At what amounts should each of the three..

  What is the firms cost of preferred stock

What sources of capital should be included when you estimate XYZ's WACC? and Should the component costs be estimated on a before or after-tax basis? Why?

  Determine the current value of your total investment

Determine the current value of your total investment. Do not make any changes to your investment at this time. Calculate your total based on the number of shares and the new price per share, for each company.

  Increase rate of return for security assuming security

Which one of the following will increase the rate of return for a security assuming the security continues to plot on the security market line? a. an increase in the market risk-to-reward ratio b. a decrease in the risk-free rate of return c. a decre..

  Bonds two years ago at a coupon rate

Soprano’s Spaghetti Factory issued 17-year bonds two years ago at a coupon rate of 7.40 percent. If these bonds currently sell for 96.5 percent of par value, what is the YTM?

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