Describe the terms: media reach, media frequency, and media impact
What will be an ideal response?
Media reach refers to the audience size (number of different people) exposed to a particular message at least once
during a specified time period. Media frequency is the number of times an average person is exposed to the
message within the time period. Media impact is the qualitative value of the exposure through a given medium.
Multiplied together, they result in a weighted number of exposures, which can be interpreted as the total number of
exposures a target audience member sees the ad, weighted by the impact value of the medium.
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If the outlay is lower by the amount that Simpson suggests, the project NPV should increase by an amount closest to:
Barbara Simpson is a sell-side analyst with Smith Riccardi Securities. Simpson covers the pharmaceutical industry. One of the companies she follows, Bayonne Pharma, is evaluating a regional distribution center. The financial predictions for the project are as follows: Fixed capital outlay is h1.50 billion. Investment in net working capital is h0.40 billion. Straight-line depreciation is over a six-year period with zero salvage value. Project life is 12 years. Additional annual revenues are h0.10 billion. Annual cash operating expenses are reduced by h0.25 billion. The capital equipment is sold for h0.50 billion in 12 years. Tax rate is 40 percent. Required rate of return is 12 percent. 24 Learning Outcomes, Summary Overview, and Problems part-i-02 13 January 2012; 10:13:23 Simpson is evaluating this investment to see whether it has the potential to affect Bayonne Pharma’s stock price. Simpson estimates the NPV of the project to be h0.41 billion, which should increase the value of the company. Simpson is evaluating the effects of other changes to her capital budgeting assumptions. She wants to know the effect of a switch from straight-line to accelerated depreciation on the company’s operating income and the project’s NPV. She also believes that the initial outlay might be much smaller than initially assumed. Specifically, she thinks the outlay for fixed capital might be h0.24 billion lower, with no change in salvage value. When reviewing her work, Simpson’s supervisor provides the following comments. “I note that you are relying heavily on the NPV approach to valuing the investment decision. I don’t think you should use an IRR because of the multiple IRR problem that is likely to arise with the Bayonne Pharma project. However, the equivalent annual annuity would be a more appropriate measure to use for the project than the NPV. I suggest that you compute an EAA.” A. €O.09 billion. B. €O.14 billion. C. €O.17 billion.
A growing population does not mean growing markets unless ________
A) the people are under a democratic system of government B) there is common ownership of all resources C) people have sufficient purchasing power D) there is adequate governmental intervention in the market E) the government has a budget surplus