Solved

Refer to the Scenario Below to Answer the Following Question(s)

question 125

Multiple Choice

Refer to the scenario below to answer the following question(s) .
John Mayes opened Sparkle Janitorial in 2005. John began his business by acquiring two contracts for office cleaning services from two local manufacturing facilities. For two years, John and his wife, Barb, performed the cleaning services alone. After acquiring three additional cleaning contracts in 2007, John hired two employees. "Up to that point, we had room to grow but we really had no advertising plan," John stated. "We were relying mostly on word-of-mouth."
By 2010, Barb hired another two full-time employees to begin Sparkle's new endeavor: carpet cleaning in homes and offices. "Competition was getting tough for both of our services at that point," Barb added. "We ran a local radio spot three times each week. Then we had an advertiser print coupons on placemats. That gave us a little more exposure."
John and Barb Mayes admit that they did not realize the value of a sound promotional plan earlier. "We wish we would have put together something catchy with a jingle long before now," they said.
-When starting their business, John and Barb would most likely have benefitted from understanding ________.

Definitions:

Annual Rate of Appreciation

The rate at which an investment or real estate increases in value over a one-year period, expressed as a percentage.

Quarterly Compounded

Refers to the process of calculating and adding interest to the principal amount of an investment or loan on a quarterly basis.

Nominal Rate

The stated or advertised interest rate on a loan or investment, not accounting for any compounding of interest within that period.

Quarterly Compounded

Quarterly compounded means that interest is calculated and added to the principal sum every quarter (three months), leading to growth in the investment or loan amount.